Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : The Thread Formerly Known as No Rest For The Wicked -- Ignore unavailable to you. Want to Upgrade?

To: Junkyardawg who wrote (51165)	6/15/1999 4:34:00 PM
From: Esway	Read Replies (1) \| Respond to of 90042

Dell Computer Executive Sees Prices, Profit Margins Stabilizing Minneapolis, June 15 (Bloomberg) -- Dell Computer Corp., the No. 1 direct seller of personal computers, said the slide in computer prices is slowing and the company doesn't expect further declines in its profitability. ''The pricing is very rational,'' Dell Senior Vice President Joe Marengi told investors and analysts at a conference sponsored by U.S. Bancorp. Piper Jaffray in Minneapolis. ''It's what you'd expect in a marketplace as big as it is.'' Dell stimulated demand in the fourth quarter by bringing margins down, Marengi said. Now, its gross margin, or the percentage of sales left after subtracting production costs, is stabilizing. ''I see no change from where we are now,'' he said. Dell's gross margin slipped to 21.5 percent in the first quarter. The average selling price for the company's PCs and notebook computers was $2,300, down slightly from the previous quarter and about 8 percent less than the year-earlier period. Shares of Dell, based in Round Rock, Texas, near Austin, rose 1 1/8 to 34 7/16 at midafternoon. The stock, the best- performer on the Standard & Poor's 500 Index from 1996 to 1998, has dropped 5.9 percent this year. Slower Sales Growth Dell disappointed Wall Street during the last two quarters. Sales growth slowed to 38 percent in the fiscal fourth quarter, which ended in January, and 41 percent in the first quarter. Growth topped 50 percent a quarter for most of 1997 and 1998. Component prices have leveled off, which by itself has slowed the price declines. Average selling prices eroded much more quickly last year, Marengi said. Marengi's comments follow upbeat remarks from Chairman Michael Dell, who told analysts yesterday that the PC business is ''quite healthy.'' Dell today unveiled an $899 PC, its first priced for less than $1,000, aimed at the fast-growing market for cheaper, lower performance machines. Dell previously avoided the market because the intense price competition undercut profits. However, Michael Dell said yesterday the company expects to make money on its $899 model, and that increased efficiencies such as ordering components via the Internet has lowered Dell's production costs. Some analysts predict the new model is the first in what will be series of lower-priced PCs from Dell. However, Michael Dell stressed that the company won't compromise profits just to gain a bigger share of the consumer PC market