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Technology Stocks : Dell Technologies Inc.

DELL 133.20

+5.7%

Nov 26 3:59 PM EST

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To: SecularBull who wrote (100575)	2/16/1999 5:30:00 PM
From: Chuzzlewit	Read Replies (1) of 176387

LOD and thread, there is both good news and bad news in the report. The bad news is that earnings did not grow as most analysts expected. Earnings were $5.17 BB compared to estimates of around $5.5 BB. The weakness seemed to stem mainly from desktop sales. [The very accurate call by Dan Niles leads me to believe he was fed the numbers by an insider.] The question we need to address is whether growth will continue to slow at an accelerating pace, or whether growth will slowly decline eventually intersecting the long-term industry growth rate. In any event we are seeing the effects of a maturing company. The second piece of bad news is that gross margins declined slightly. On a sequential basis they moved from 22.5% to 22.4%. This may represent a seasonal shift in the sales mix or it might suggest pricing pressure at the high end -- I don't know. Now for the good news. The product shift has resulted in a buffering of gross margins. This is manifest in the very small decrease in ASPs sequentially. This reflects an increasing proportion of notebook and enterprise sales which now collectively account for 36% of system sales for the full year, up from 29% last year. Unfortunately, there was only a slight shift up (1%) from the previous quarter. Another piece of good news is that Tom Meredith is making good on his promises. The days in inventory dropped to 6 days and the DSO dropped to 36. So, financial management of the company remains very strong. Dell continued to repurchase shares, reducing the number of fully diluted shares by 0.4%, but the number of basic shares outstanding remained constant. CTC

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