LoD,
Several DJNewswire stories on Dell hit the wires today - 10 to be exact.
Here are the headlines...
Dell Founder Agrees To $12M Tax Value For Texas Home
Dow Jones Newswires--March 22, 1999
Options Report: Traders Look For Dell To Bounce Or Sink
Dow Jones Newswires--March 22, 1999
Dell CEO -2: Exec's Track Record Glimpse Of Co's Potential
Dow Jones Newswires--March 22, 1999
Dell CEO Bold On Growth, Murky On Specific Moves
Dow Jones Newswires--March 22, 1999
March Sales Seen Crucial For PC Cos Amid Weak 1Q
Dow Jones Newswires--March 22, 1999
Stock Futures Report: S&P's Content With Range Trading
Dow Jones Newswires--March 22, 1999
Dell To Offer Dimension, OptiPlex PCs With Celeron Chip>DELL
Dow Jones Newswires--March 22, 1999
DLJ Trims Rev, Earnings Estimates For Dell Computer
Dow Jones Newswires--March 22, 1999
Toshiba Begins Net-Based PC Sales Direct To Customers-Nikkei
Dow Jones Newswires--March 22, 1999
Novell Unveils Internet Caching System, Dell Marketing Pact
Dow Jones Newswires--March 22, 1999
A couple stories follow...
Enjoy,
Ian.
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Dell Computer Corp.
Dow Jones Newswires -- March 22, 1999
Dell CEO Bold On Growth, Murky On Specific Moves
By Clinton Barkdoll
WASHINGTON (Dow Jones)--Amid the Wall Street spinfest that has ensued since Dell Computer Corp. (DELL) reported lower-than-expected fourth-quarter numbers, Chief Executive Michael Dell has come under increasing pressure to pacify investors.
While playing his cards close to the vest, Dell hinted at some concrete plans for the future of his company in a recent interview with Federal Filings Business News.
"Our overall cost structure is much less than any competitor," said an unworried Dell. "You'll see Dell Computer continue to grow much faster than the rest of the industry," he added, noting that his company will beef up sales efforts this year in the $50 billion server market, where Dell has a mere 8% market share.
Dell also outlined an ambitious plan to increase his company's personal computer presence, which currently has a 9% global market share. "My goal is for us to have a 25% market share in four to five years and perhaps 40% in seven to eight years," said Dell.
In reaching these numbers, Dell hopes to achieve 50% of PC sales online. "We were at 25% in the fourth quarter and it keeps going up," Dell boasted without revealing a time frame for reaching the 50% target. Dell also "wouldn't rule out the possibility" of expanding via acquisition, but was quick to note that he "is not actively looking for a takeover target."
And what about the rapidly expanding market for sub-$1,000 PCs, which some analysts have cited as an area Dell has been slow to embrace? Dell likes to use an analogy of buying a car in explaining his philosophy about this question.
"You can buy a new car for $20,000 or $8,000," he said, "and you might find a used car for $150. But how will they perform?"
Dell thinks recent promotions, such as computers for $299, border on "consumer trickery."
"Maybe you don't get a modem, monitor, or software or maybe the service level is low," he speculated. "We could sell a computer for $400 but it wouldn't perform or run the software people want to use."
Nonetheless, Dell recently rolled out a $999 computer (monitor included) - the company's first entry into the sub-$1,000 computer market.
Although less expensive computers have a slimmer profit margin, Dell recognizes the opportunity of such machines. "Low-cost computers stimulate new buyers to enter the market," said Dell, "and new buyers stimulate growth." Dell added that computer prices are likely to continue falling. "As component costs come down, so too will the price of PCs."
Stock Has Paid Investors Handsomely Over Past Decade
For investors, Dell stock has paid sweet rewards over the past decade. The stock is up a stratospheric 30,000% since 1990 and will likely be the top performing U.S. stock of the 1990s.
But under the "what goes up must come down" theory, some market watchers became more bearish on the company after fourth-quarter sales growth slowed to 38% after several consecutive years of breakneck 50%-plus growth.
Undeterred by detractors, CEO Dell continues to set high goals, which he believes can be accomplished with a multi-pronged attack on the computer industry. For starters, Dell thinks broadband communication technology and new Pentium III processors (sales of which are off to a "very strong start," according to Dell) will fuel growth over the next few years. "New and improved technology always drives the market," Dell quipped.
Moreover, Dell thinks that "Internet devices" will see explosive world-wide growth over the next 10 years. "I predict there will be 1.4 billion PCs by 2009, but there will be 14 billion devices somehow attached to the Internet," said Dell, who can barely contain his enthusiasm when discussing such possibilities.
These connected devices will range from cars to audio equipment, opines Dell. "If everyone has five to seven products connected to the Net, the role of the PC will only be enhanced, which will cause incredible sales growth."
Dell's optimism for Internet devices and e-commerce is evidenced by his recent launch of Gigabuys.com, an online superstore of more than 30,000 computer products. "Gigabuys seems to be doing pretty well so far," said Dell, explaining that a high percentage of the 2.5 million weekly visitors to Dell.com are interested in buying peripherals for their computers. "This was a no-brainer for us to do and it's a direct hit at meeting our customer's needs," Dell said.
And Dell could be adding to its stable of online stores. The company has registered numerous domain names over the past few months, including Dellauction.com. "We must protect ourselves from piracy and all other sorts of concerns," Dell reasoned. However, Dell demurred when asked if Dellauction.com was registered as a precautionary measure.
"We have no announcement to make," Dell responded.
Online plans aside, Dell believes that constant "innovation and superior service are keys to growing the company."
Innovation and service have been Dell mantras when competing with the likes of International Business Machines Corp. (IBM), Compaq Computer Corp. (CPQ) and Hewlett-Packard Co. (HWP), all of which have indicated that Dell is a main competitor. "I think about all of them a lot," said Dell when asked if there is one company he fears more than others.
As to stories that Apple Computer Inc. (AAPL) CEO Steve Jobs told his employees that he was "coming after" Dell by selling computers online, Dell says "if you're going to pick a fight, pick a real fight."
For now, Dell isn't worried about Jobs or other competitors who claim they are gearing up to defeat him. "We will consistently beat them with the latest and greatest technology while delivering great value to our customers."
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Dell Computer Corp.
Dow Jones Newswires -- March 22, 1999
Dell CEO -2: Exec's Track Record Glimpse Of Co's Potential
If anyone doubts Dell Computer's ability to maintain its entrepreneurial spirit, one might simply look at CEO Dell's phenomenal rags to riches track record, which dates back to his days as a Texas newspaper boy.
When he was barely a teenager, Dell took a job selling subscriptions to the Houston Post. As Dell tells it, the Post used "a pretty random way of approaching new business." So young Michael went quickly to work and invented a system where every newly married couple and/or homebuyer in a 16-county region of Texas received a personalized invitation to subscribe to the newspaper.
"The subscriptions came in by the thousands," he recollects.
When Dell's schoolteacher asked the class to do their tax returns that year, she thought Dell added an extra zero when he reported an $18,000 income selling newspapers. No mistake.
"I had made more money that year than she had," Dell writes in his new book, "Direct From Dell."
Several years later in 1983, Dell was an 18-year old freshman at the University of Texas-Austin where he started assembling computers in his dorm room. By the end of his first year in college, Dell was making $50,000 a month selling his wares. Concerned that his parents wouldn't approve of Dell quitting college, "I just went ahead and did it, whatever the consequences," Dell explains. The rest is, well, history.
Today, the company is worth approximately $110 billion and CEO Dell's personal net worth is pegged at more than $13 billion, making him the fourth richest man in America, according to last year's Forbes survey.
When pressed as to why he sold more than 15.8 million shares of his company's stock in 1998 - a year in which the stock price more than tripled - Dell claims that it was simply part of an ongoing "diversification strategy." Dell notes that like many other corporate executives, he has been consistently selling his stock for the past 12 years and will continue to do so. "Our shareholders should not be concerned," Dell affirmed.
-Clinton Barkdoll; Mergers & Acquisitions Reporter; 201-938-5099
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