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

To: D. Swiss who wrote (144533)	10/13/1999 5:54:00 PM
From: Alohal	Respond to of 176387

Thread: Here is Jim Seymour's take on Dell-Samsung deal from TSC. And he's a rather conservative voice! Enjoy. Alohal Four Weddings, No Funerals By Jim Seymour Special to TheStreet.com 10/13/99 8:39 AM ET Lots of high-tech news and noise in the market in the past couple of days. In that environment, it's easy to miss important stuff that can help make you money. Here are four deals that have been reported, but not sufficiently examined in the usual print and online media ... and what I think they mean: Dell (DELL:Nasdaq) and Samsung have announced that Dell's ponying up a cool $200 million to buy convertible bonds in the South Korean tech giant. And also signing a contract to buy $8.5 billion -- yep, billion with a "b" -- of Samsung's active-matrix LCD panels over the next five years. Active-matrix LCD panels are the hottest display technology around now. Older, dimmer, duller technologies just can't compete with the TFT (thin-film transistor) active-matrix technology. But they're a bear to make, with limited production, due in large part to LCD makers' inability to get many panels from a single "die," or whole-sheet substrate of manufactured LCDs, and a very low yield rate. Samsung's tackling both die-size and yield problems with a new plant it'll help build with the Dell money. The new one, opening in 2001, will turn out relatively huge 730 x 920 millimeter substrates, which (theoretically) will net six 17-inch active-matrix panels per. (That assumes a 100% yield, which is of course still unrealizable. Get five per and they'll be doing very, very well.) The deal is intended to buy Dell an inside track on LCD-panel supplies. Every PC manufacturer is hurting for more LCD capacity, especially after the Taiwan earthquake last month. Dell has been "shipping-constrained" (isn't that a great term for "can't make 'em fast enough"?) on some of its notebooks, especially those with 13.3" screens. And over the next couple of years we're going to see the demand for larger LCD displays skyrocket, as more and more of us replace our desktop CRT displays with sharp, thin, cool-running, energy-saving LCD displays. Dell wants those big ones, too, and was clearly willing to pay a ... umm ... bribe? ... to get at the front of the line and assure that it can stick to its JIT (just-in-time) production model. Dell wasn't first, though: Apple (AAPL:Nasdaq) bought $100 million worth of Samsung convertibles three months ago. Fair question: Is there a kind of implicit PV/FV calculation here, in which $100 million three months ago beats $200 million today? What it means: Smart, smart move by Dell, putting some of its cash hoard to work to lock-up future supplies of a critical component. Dell looks better and better every day, and I'm beginning to think it will dodge the bullet on corporate computing purchases delayed by Y2K fears 'til after the first of next year. Dell sure feels like a great long these days... .