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

To: stockman_scott who wrote (139067)	8/12/1999 9:08:00 PM
From: Ian@SI	Read Replies (2) \| Respond to of 176387

A rather positive story in the Interactive version of BARRON's on Dell . interactive.wsj.com The end of the story follows: ... Furthermore, its core business, PCs, holds much promise. "It will be relatively easy for Dell to expand into consumer," says Roger Kay, an industry analyst with IDC. " It's easier to build from a commercial to a consumer franchise." And in an effort to take on the price-cutters, the company's first sub- $1,000 PC unit, priced at $899, went on sale this week. Meanwhile Dell continues to maintain share in its bread-and-butter corporate business, and to grow dramatically in its high-margin enterprise business, which includes servers, storage and workstations and comprises 14% of sales. Dell is also leaner than its competitors, and keeps whittling down its costs. "Dell's having record profits and Compaq, IBM, [Hewlett Packard] are all losing money," says Schutte. "And Dell is bigger, . . . more profitable and growing more rapidly than Compaq," which has its own problems, though the worst appears to be over (see Weekday Trader, "Is it Turnaround Time for Compaq?," July 12). Dell also has great opportunities internationally: Sales to Japan and Asia, for example, were up 48% last quarter, and it's growing rapidly in Europe, too. At Thursday's closing price of 40 1/4, the stock is 26% off its 52-week high of 54 5/16 that it set in January. Admittedly its P/Es of 56x estimated earnings of 72 cents a share for fiscal 2000 (ending in January), according to First Call, and 41x estimated earnings of 98 cents in fiscal 2001 are premiums to its long-term earnings growth rate of 35%, and to the group. But most believe that premium is deserved. "It is growing at three times the rate of the S&P and you're paying less than that," says Kwatinetz. "They're signficantly larger [than Gateway], and their revenue stream is much higher," adds Terry O'Brien, senior technology analyst at Branch, Cabell & Co., who rates Dell a Buy. Indeed, Dell posts 40%-50% revenue growth versus's Gateway's 25%-30%. "Among PC makers, the one we're most comfortable with is Dell," adds John Leo, co-manager of the Northern Technology Fund. "The company is maintaining its cost and business advantage. When it reports next week, they will be able to meet and maybe beat Street expectations . . . and [should show] solid unit gains." Perhaps that's why two firms recently raised their ratings on Dell: BancBoston Robertson Stephens to Long-Term Attractive from Market Performer, and SG Cowen to Strong Buy from Buy. Selling PCs is the easy part; making money in them is another story. "The margins are thin and the margins for error are small," says Schutte. And there's always the danger that the PC market will shift to "appliances" and trendy devices like Palm Pilots and cell phones. "But I've heard that for five years now, and every year [they have] a different name," says Schutte. One thing's pretty likely, though: Five years from now, Dell will remain a leader. That's not something you'd say with confidence about any of its competitors.

To: stockman_scott who wrote (139067)	8/12/1999 10:06:00 PM
From: Norm Tock	Respond to of 176387

Hi Scott, I've been behind the woodwork for awhile, but after today's comments by Fortuna << said he assumed coverage from Merrill analyst Steve Milunovich of Dell Computer Corp. [ DELL] with a neutral rating, a downgrade from the prior accumulate rating.>> I had to come out. Fortuna seems to be one of the shoot from the hip type of analyst that doesn't do a lot of credit to his profession. I'm surprised he didn't withhold his comments until after the earning have been announced. Dorrine, thanks for the information regarding the rain. Our place in Sun City Center was terribly dry when we left in May. I hope the water in the ponds has been replaced! Even our resident alligator traded ponds!