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

To: Sig who wrote (146615)	11/5/1999 5:14:00 PM
From: Alohal	Respond to of 176387

Here' what Moody's has to say about Dell. It is wonderfully positive, but pay special attention to the last two paragraphs, these are the risks Dell faces. Personally I believe that they are up to the challenge, but it's a pretty good assessment of the minimal risk involved. The street is saying "show me" and so Dell must. I certainly don't think the game is over in the PC sector, but Dell has the best PC biz and is likely to be a very big winner. As for today's action? Clearing out the stops? Shareholders nervous? Big funds uncertain, chasing big gains elsewhere? All of the above and then some? This 3Q earnings report will be in many ways crucial to the short term health of Dell's stock.I believe they will be impressive numbers and provide a solid boost to the stock price [In keeping with Arthur's suggestion of disclosure: I hold both long term and trading positions in Dell. My long term shares bought @ avg 9 1/2. My trading shares bought at 37 1/2 (only 2/3 of that position is filled).] Cheers Alohal Moody's ups Dell Computer snr unsec debt (Press release provided by Moody's Investors Service) NEW YORK, Nov 5 - Moody's Investors Service upgraded its rating on Dell Computer Corp.'s senior unsecured long-term debt to A3 from Baa1, and said that the rating outlook is positive. According to Moody's, since the Baa1 rating was last confirmed in April 1998, Dell's size, market share, profitability, and liquidity have grown significantly, while its revenues have become more diversified. Meantime, the computer maker's already low financial leverage has fallen as its debt has remained unchanged. Dell has also outperformed its rivals by most measures of comparison. The company's performance has benefited significantly from early,aggressive and extensive use of the Internet to boost sales, cut costs, and improve productivity. Its low cost-structure provides significant advantages over rivals in the intensely price-competitive computer hardware industry. Dell's avoidance of the low-end price-focused segment of the PC market has left it relatively unscathed from notorious recent declines in average selling prices. Unlike most of its competitors who still rely on the distribution channel to a great extent, Dell's direct relationship with end-users provides important benefits, such as opportunities for building and strengthening long-term customer loyalty. It also supplies early indications of shifting demand patterns, enabling the company to quickly adjust purchasing and manufacturing to minimize inventories of products known for short life-cycles. The upgrade incorporates the expectation that Dell will achieve further gains in revenues, profits and cash flows as it continues to leverage its successful direct-sales and build-to-order models across a widening range of product categories, customer segments, and geographic regions. It reflects the rating agency's view that management will continue to operate with little debt and substantial liquidity. And while spending on stock repurchases will likely remain sizable, funding is expected to come from cash flow, not borrowings. Management's record of conservatism toward financial leverage and acquisitions is not expected to change in the foreseeable future. Moody's believes that Dell's decision to offer an expanding range of information technology services -- either directly or through third parties such as IBM Global Services -- will further diversify its revenues while making them somewhat more predictable and stable. It should also enhance Dell's market position by bolstering its ties to existing customers and by addressing concerns that some companies -- especially buyers of servers and other high-end systems that require ongoing support and service -- have had about Dell's ability to provide a competitive level of services. The upgrade, which concludes a review announced October 5, 1999, affects Dell's $500 million of senior notes and a $250 million unsecured revolving credit facility. Although the company's progress has been significant, Moody's noted that its principal rivals are working assiduously to expand their use of the direct-sales and build-to-order models that have been instrumental in Dell's success. And they are focusing on cutting costs and improving asset management with ever-greater intensity. These efforts are likely to narrow (but not eliminate) Dell's substantial cost advantage. The positive rating outlook reflects Moody's view that Dell's ongoing expansion efforts will, over the next few years, produce significant additional growth and sustainable gains in market position without deterioration of the company's highly liquid and exceptionally strong capital structure. Dell has a proven management team that has demonstrated a strong discipline for managing growth. Still, Moody's believes that the company's aggressive expansion across product and service categories, end-user segments, and overseas markets present considerable operating and execution challenges (especially in China where a major push is underway). Moody's is concerned about Dell's ability to scale management at the pace and with the quality that will be required to avoid execution stumbles. Moreover, rapidly evolving developments in computing, such as expected growth in the role of information appliances, creates some uncertainty as to their eventual effect on PC manufacturers. Before moving to a higher rating, Moody's will await further evidence that the company has adequately transitioned through the numerous challenges it faces. Moody's noted that Dell's ratings reflect risks inherent in the volatile personal computer industry, including a high degree of operating and business risk caused by intense and evolving competition, rapid product obsolescence, and thin profit margins. Round Rock, Texas-based Dell Computer Corporation is one of the world's largest computer companies.