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Technology Stocks : Dell Technologies Inc. -- Ignore unavailable to you. Want to Upgrade?

To: TTOSBT who wrote (136909)	7/17/1999 1:31:00 AM
From: chenys	Respond to of 176387

July 16, 1999 Wall Street Journal Dell CEO Gives Details on Plans To Offer Internet Service in U.S. By BOB SCHLERER and PETER LOFTUS Dow Jones Newswires AUSTIN, Texas -- Dell Computer Corp. Chief Executive Michael Dell, treated like a celebrity at the company's annual meeting Friday, provided shareholders with some guarded details of his growing aspirations as an Internet-service provider. Mr. Dell made the statements as several competing computer makers are moving to more closely integrate the PC with Net access. Gateway Inc., for instance, runs the Gateway.net service, and is in talks to buy EarthLink Network Inc. in an effort to bolster its online presence. Gateway Is in Talks to Buy EarthLink (June 23) Is Time Ripe for PC Makers to Plunge Into Net Access? (June 24) * * * Company Profile: Dell Computer Mr. Dell told the estimated 2,000 shareholders in attendance to expect an announcement soon regarding availability of the company's Dell.Net service in the U.S. The Internet service already is available in parts of Europe. "You will see Dell aggressively enter the market for Internet access" in the U.S., Mr. Dell said, although he didn't cite a specific date for a product launch. Still, he dispelled rumors circulating on Internet chat rooms that Dell is planning to acquire a major Internet-services provider as part of its plans. He said the company's plans aren't contingent on such an acquisition. Dell Chief Financial Officer Tom Meredith said after the meeting that Dell operates its Internet service in Europe through partnerships with various providers. Mr. Dell hinted that a similar arrangement for the company's Dell.Net Internet service could work in the U.S. But he warned that offering Internet service "does not necessarily mean we will acquire a company to do it -- it's not needed to enter that market." "Like Dell.Net in the U.K., you can expect to see a similar entry in the U.S.," he said. "We think it will help us continue to grow the consumer PC business." Analysts have said that offering Internet access could be a way for PC makers to generate more revenue in an era when PC prices have been declining. Talk Lifts MindSpring Shares Despite the warnings of Messrs. Dell and Meredith, shares of MindSpring Enterprises Inc. climbed Friday on speculation that the Internet-service provider could be in talks with Dell for a possible business deal. Investors think MindSpring is a potential candidate as a party to Dell's U.S. Internet-access service plans because MindSpring has said twice within the past month that it is in discussions with an unidentified party for a possible business combination or other alternative. A MindSpring spokeswoman declined to comment on the speculation. Ladenburg Thalman & Co. analyst Youssef Squali said he doubts Dell would make an outright acquisition of an Internet-service provider because the relatively high valuations of such companies' stocks would reduce Dell's earnings. Instead, Dell might strike a strategic partnership with an Internet-service provider, a deal that could involve a partial equity transaction, Mr. Squali suggested. "It would make sense for some sort of alliance," he said. Last week, MindSpring canceled a meeting with analysts, citing ongoing talks with the mysterious party. The company's shares climbed $1.75, or 3.7%, to close at $48.75 Friday on Nasdaq. Sands Brothers analyst James Waggoner also thinks an alliance between Dell and MindSpring would be more likely than a Dell acquisition of MindSpring, assuming the companies are in talks. But in addition to MindSpring's high valuation as an obstacle, Mr. Waggoner cites MindSpring's "free-lance and free-spirit" corporate culture, which might clash with Dell's more established atmosphere. A partnership between Dell and MindSpring would expand Dell's customer base by accessing MindSpring's roughly one million subscribers, Mr. Waggoner said. The incentive for MindSpring and other Internet-service providers in such an alliance is to secure funding to remain competitive in a consolidating industry. An Upbeat Outlook Overall, Mr. Dell provided shareholders with an extremely upbeat assessment of the company's outlook. In return, he received celebrity treatment from those in attendance, even though the company's revenue growth rate in the first quarter dipped below 50% for the first time in several quarters, and its share price remains about 20% off its 52-week high. Dell shares closed at $43.25, down 68.75 cents, Friday on the Nasdaq Stock Market. Mr. Dell said his company stands to gain $10 billion in incremental annual revenue over the next few years in each of four areas -- consumer PCs, services, global expansion and enterprise computing. "We think we will be able to continue to deliver exceptional shareholder value," Mr. Dell said. He also reiterated his belief that the PC industry is healthy, saying he doesn't see any dramatic, fundamental changes taking place in it that could threaten the company. Instead, he said a number of PC makers simply haven't been able to adjust their cost structures to compete in an era of lower-cost, direct-sales models such as Dell's. He brought up struggling Houston rival Compaq Computer Corp. several times -- for example, with his reference to "the implosion of a number of our competitors" -- and drew applause each time from the audience.