Kemble and other thread members: Fortune has given DELL some great recognition. They are part of a cover story that will hit subscribers mailboxes today. I enclose what I posted on the site last night. It is great to review if anyone has any doubts about DELL's future as a firm that will continue to set new standards. -Scott
****PLEASE READ: When this hits the newstands and the CNN/Fortune TV Program, DELL will get additional attention. And they deserve it....DELL is clearly the next DELL!!!
I enclose the new "Fortune Magazine Top 10 Most Admired Companies in America." **This is DELL's first time in the top ten yet the following table clearly demonstrates how DELL has been able to deliver SUPERIOR returns for investors. Please print and read the article I have attached to the bottom of the financial table. This just provides more good reasons to have a LARGE position in DELL. --Scott
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(complements of Fortune Magazine....March 1, 1999)
Rank
Company Total Return 1998 1993–98*
1) General Electric 41.0% 34.2%
2) Coca-Cola 1.3% 26.1%
3) Microsoft 114.6% 68.9%
4) Dell Computer 248.5% 152.9%
5) Berkshire Hathaway 52.2% 33.8%
6) Wal-Mart Stores 107.6% 27.6%
7) Southwest Airlines 38.4% 6.6%
8) Intel 69.0% 50.6%
9) Merck 41.3% 37.0%
10) Walt Disney 8.5% 16.9%
Top ten average 70.5% 45.4%
S&P 500 27.1% 23.5%
Please read this excerpt from the March 1st, 1999 issue of Fortune:
<<But a closer look at the two companies (DELL and Wal-Mart) reveals similarities. Both have famous CEO-founders. Both have killer stocks. Dell, which has gained 87,000% since 1990, is already legendary. Wal-Mart has rebounded nicely from an early '90s slowdown, adding 290% to its stock price over the past two years. Most of all, both companies are operational superstars, obsessed with quick product delivery. Keenly focused on their customers, they measure performance in minutes and seconds, rather than days and hours. And they force suppliers to keep pace. By maintaining low inventories and streamlining processes, they cut costs and pass the savings along to customers. Both companies steep employees in this philosophy. Dell bases bonuses largely on the company's return on invested capital--that is, how efficiently it operates. At Wal-Mart, every employee is expected to read and understand endless printouts of sales and inventory data.
Technology makes all this possible. But while Dell and Wal-Mart spend scads on computers and do amazing things with them, their executives bristle when asked to talk tech. All those fancy systems are just tools, they say. The means to an end. It's that attitude--unwillingness to get mired in technology for technology's sake--that keeps both companies ahead of the pack.
At Dell everyone talks about the direct model, the company's practice of eliminating middlemen and selling PCs directly to customers. "Our only religion is the direct model," says vice chairman Kevin Rollins. CEO Michael Dell's new book is called Direct From Dell; a company-customer powwow scheduled for this summer will be called Direct to Dell. Ask an executive what it's like working with the Chinese government, one of Dell's newest customers, and he says approvingly, "They really understand the direct model." Everything is direct, direct, direct. "Analysts complain that we say the same thing over and over," says vice chairman Mort Topfer. The repetition may grate, but being direct has made Dell a powerhouse by putting it in constant touch with customers, enabling it to respond almost immediately to problems, and giving it constant, actionable feedback.
In the 15 years since Michael Dell began selling computers from his University of Texas dorm room, his company has grown into an $18-billion-a-year business that sells more PCs to medium-sized and large U.S. companies than giants like IBM, Hewlett-Packard, and Compaq. Dell is gunning for other parts of its rivals' business too, such as servers and high-margin storage products; it now sells almost 20% of the PC servers bought in the U.S., according to Roger Kay, an analyst at International Data Corp. Dell is also expanding internationally. Michael Dell says he eventually hopes to control 20% to 25% of the global PC market and aims to unseat leader Compaq (which has a 14.8% market share worldwide) in every region it serves.
Dell executives are confident that technology will help them capture those new customers. "We're always looking to see what we can do to make our customers' lives easier or save them money," says Michael Dell. "It pervades every part of the company. It might be a design challenge; it might be a manufacturing and distribution challenge." Take manufacturing. Dell makes its OptiPlex desktop computers at a 250,000-square-foot facility called Metric 12 in Austin, Texas. Bar-code readers flicker incessantly as they follow each PC on its journey down the line. A steady stream of trucks drops off raw materials from suppliers and picks up finished computers.
A Dell employee walks along the production line to show where the company's engineers have sped up production, bit by tiny bit (collectively, Dell engineers have more than 200 process-related patents). Workers used to touch a computer 130 times in the process of assembling it; that number is down to 60. At one station near the beginning of the line, workers attach motherboards and power-supply units to a computer's chassis. This effort, which once required six screws, now takes one. Farther down, a forklift-like tool called the stacker moves piled PCs in groups of five; workers used to move them one at a time. Near the end of the line, almost-finished computers sit on racks, ready for software installation. Employees plug the computers in to special adapters to download the software, which takes 45 to 90 minutes. Dell engineers are working on an automatic installation system that will reduce that time to 20 minutes. Even now, Dell can assemble OptiPlex computers in five hours or less.
Dell is equally single-minded about electronic commerce, which causes so much confusion for so many companies. Dell does about 20% of its business online ($10 million a day) and expects that eventually half its sales will be through the Internet. "Michael says the Internet is the ultimate direct model," explains Topfer. In 1997 the company created Premier Pages, Websites that enable a customer's authorized employees to research, configure, and price the PCs they plan to buy. To minimize processing errors, all information specific to the customer--system preferences, support details, inventory management policies--is included on the web page. Like the manufacturing improvements in Metric 12, Premier Pages save money. Ford Motor cut procurement costs by $2 million when it moved its Dell business online. Dell saved money on the Ford deal too, because it didn't have to hire as many order-entry people.
The Net is transforming Dell's sales to small businesses as well. It used to be that the small fry couldn't dream of getting the sort of service Dell gave its Fortune 500 customers. Now they (almost) can. "Our goal is to take all the expensive things we do for large accounts and make them happen for small ones," says senior vice president Paul Bell. Michael Dell isn't likely to drop in on a customer who works from home, but he might talk to her through one of the "Breakfast with Dell" seminars broadcast over the Net. "We stand to benefit quite a bit from [the Internet]," says Dell. "A lot of our competitors are going to be challenged, because they're stuck with an old model."
Direct from Austin, Dell has loudly proclaimed itself the new model. >> |
