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

To: Patricia Walton who wrote (149845)	12/25/1999 10:15:00 PM
From: TechMkt	Respond to of 176388

HAPPY NEW YEAR to all my DELLhead friends. Look forward to seeing some of you at the shareholders meeting in July. Fez ______________________________________ SATURDAY GROUP: Dell is Still Swell editor-in-chief: Jono Steinberg (12/25/99) Shares of Dell Computer (NASDAQ: DELL - Quotes, News, Boards) have been on a tear over the past month, surging to Thursday?s close of $52.63 from around $40 in November. So, what's going on? And, in 2000 will Dell be able to duplicate the tremendous performance it has enjoyed over the last five years? Like this Article? In case you missed it, Dell shares rewarded investors with a cumulative return of almost 7,000% over the past five years, resulting in a 135% average annual return. Wow! While this year Dell has lagged the Nasdaq Composite Index and the Nasdaq 100, returning only 45%, investors have still enjoyed solid returns. Afterall, let?s not be greedy. I believe going forward Dell will continue to deliver consistent revenue and profit growth as the company moves to capitalize on new opportunities in the marketplace. And shareholders will be well rewarded. Sentiment turned negative for Dell early in the fall following the earthquake in Taiwan. Concerns regarding component shortages, higher memory prices and Y2K sent shares into the mid-$30s. In fact, on October 18 Dell indicated that higher memory prices would cut into its profits. Because Dell builds machines to order for customers, it is vulnerable to sudden spikes in component prices. That said, it is also able to capitalize on weakness in component prices, and clearly has the best business model of any PC company. The recent strength in Dell shares is the result of renewed enthusiasm for the company's business once Y2K concerns abate as well as the ability of new business initiatives to power growth going forward. Here's what's going to drive Dell in 2000. First, the February 17 launch of Windows 2000 will benefit PC manufacturers in general, and Dell in particular. While the typical hardware upgrade cycle will benefit the industry as a whole, Dell, with its direct manufacturing model, is uniquely positioned to benefit. Typically, PC companies try to flush out older product before shipping new product into distribution channels. As Dell has no channel inventory to work down, it can drive revenue quickly from early adopters of the Windows 2000 operating system. While many existing PCs have the necessary configuration to run Microsoft's (NASDAQ: MSFT - Quotes, News, Boards) new operating system, new machines are necessary to run new applications for Windows 2000. Additionally, there is some historical precedent pointing to an uptick in hardware demand when Microsoft introduces a new operating system. Remember the benefits that PC companies enjoyed following the release of Windows 95 and 98? Expect Dell to make some noise regarding the enterprise storage market as well. There is a lot of speculation surrounding Dell's plans for this robust market, and Dell wants to be a player. Any news regarding products and strategy could ignite the stock and cause investors to analyze Dell as more than a direct PC seller. The recent launch of the WebPC from Dell targeted at the consumer market is also a positive. While industry estimates predict that the consumer market will account for roughly half of industry revenue this year, consumer revenue is only 15% of the mix at Dell. Even so, Dell recently unseated Compaq Computer (NYSE: CPQ - Quotes, News, Boards) to take the leadership position in retail PC sales--expect this momentum to accelerate. So, here's what I am thinking. Dell has a great track record, enviable growth prospects and superb management. As Dell begins to penetrate new markets, its shares should be valued on par with other leadership technology companies, such as Cisco Systems (NASDAQ: CSCO - Quotes, News, Boards) and Sun Microsystems (NASDAQ: SUNW - Quotes, News, Boards), companies with high market shares and great track records. While Dell does not enjoy the operating margins of this peer universe, I am looking at growth prospects and leadership position. Dell is trading at a 30%-plus discount to this group based on next year's earnings estimates. That's too great of a discount. As Dell delivers on its financial expectations and aggressively enters new markets, shares are poised to trade higher. So will 2000 be a great year for Dell shareholders? I think so. I am not predicting a 100%-plus performance year as Dell has averaged in the past five years. Nonetheless, expect solid performance.