Just listened to an interview with Kumar concerning IBM/Dell deal...he is clearly expecting more, saying, among other things, "they have to crawl before they walk, walk before they run"...
he thinks that it is a good move, and that it more likely than not that it will lead to a broader, deeper agreement(s)...possibly the PC/service tradeoff which many are expecting...
Also said that PC demand is "healthy" (remember...this is the guy who called Dell's last quarter growth "anemic")..Said that the "scare" is a company-specific problem (not overall)...and that it arose because Compaq stuffed the channel with 2 weeks extra inventory (thinking that they could work it down in Q1, because there would be higher-than-normal Q1 demand due to Y2K)....Given that additional Y2K was not quite as big as expected, and the delay (in orders, "normal" Kumar says) because of PIII...Compaq got caught (in the same game as last year....) having to work off excess inventory....That some are misplaced in seeing the "should-have-been-expected" seasonal weakness as true cyclical weakness (downturn)...
My spin: Look, if there WERE a problem in overall PC demand in this quarter, Kumar would be the first to hammer all involved...He is not doing this (actually raised Gateway's estimates), so this is a (very) good sign (regardless of what you think of him...)
Finally, he kept his focus on Dell with this quote, "Going forward, Dell will have a difficult time growing at historic growth rates"...
Well, given Dell has historically grown earnings/revenues well north of 50%.....Kumar is not saying anything different from the general belief (from most bulls) that Dell can grow in the 40's (earnings/revenues/EPS)...Notably, Kumar said nothing about 30% growth, or a massive slowdown in growth...
Looks like Kumar is settling into a view that is not incongruent with (what I believe is) the bullish view... |
