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

To: TigerPaw who wrote (152289)	1/27/2000 12:03:00 AM
From: Patrick E.McDaniel	Read Replies (5) \| Respond to of 176387

TP, I played the conference call again and picked up more details I missed on the first pass. Dell production was as expected in the Home and Small Business markets. The problem on the demand side was in corporate accounts not restarting orders. Part of what hurt Dell was a shortage of the 450MHz Chips so Dell bought 500MHz chips and ate the difference eating into Gross Margins. The lingering issues are restarting corporate ordering and supply issues of RDRAM and 800MHz chips. Both RDRAM and 800 MHz chips are on the top end of margins so how these ramp up will say a lot for Q1. Pat

To: TigerPaw who wrote (152289)	1/27/2000 1:21:00 AM
From: jim kelley	Respond to of 176387

TP, I agree with your analysis. INTC has always tried to muscle the market and squeeze out the competition. Sometimes this can be a good thing and sometimes its bad- like now. Expenditures on marketing un deliverable products sure do hurt OPEX. Inventories of unshippable mother boards and other components hurt DELL's suppliers in the wallet. I think the Rambus and Coppermine issues are about to be dispelled in February but this will probably happen again in the future. I'm still curious about how CPQ and HWP got their supplies. They do not seem to be complaining of parts shortages. But then DELL is the biggest user of INTC parts and HWP and CPQ both buy AMD processors.

To: TigerPaw who wrote (152289)	1/27/2000 1:50:00 AM
From: stockman_scott	Read Replies (1) \| Respond to of 176387

TP: A great analysis of DELL's difficult situation.....who would have ever expected this? I sold my DELL late last year due to the market sentiment for the stock. Yet, all of my relatives still maintain large positions in the DELL. Fortunately they are well diversified (in other stocks like AOL, CMGI, CSCO, EMC, INTU, MSFT, ORCL, and SEBL) and will weather 'the DELL turbulence' OK. DELL continues to be an incredible company and MSD's VC firm has invested in the internut company that I am with right now. I am even typing this message on a wonderful new DELL Latitude Cpx <VBG>. It is possible that I may re-enter DELL but I will be waiting for quite a while. Market sentiment is important. At the moment I prefer B2B stocks like AGIL and SEBL. My relatives are MUCH more patient than I am and plan to hold all of their DELL. They are not like many of the nervous Fund Managers that run for the exits as soon as they think they see trouble <G>..!! DELL will continue to be a world-class technology firm but its size and dependence on INTEL creates a situation where it becomes almost impossible to consistently beat the streets expectations. I LOVE the company but not the stock. Good Luck Investing Everyone. Below, I enclose the Wall Street Journal's Latest Update on DELL. Regards, Scott ---------------------------------------------------------- <<January 27, 2000 Dell Lowers Earnings Expectations On Purchase Delays, Chip Shortages By GARY MCWILLIAMS Staff Reporter of THE WALL STREET JOURNAL Dell Computer Corp., warning its days of sky-high revenue growth are ending for now, said customer-purchase deferrals at year end and chip shortages landed a one-two punch to its fourth-quarter sales and profit. The Round Rock, Texas, personal-computer maker said it expects to report net income for the fiscal quarter ending Jan. 28 of $430 million, or 16 cents a diluted share -- well below analysts' estimate of $462 million, or 21 cents a share. The results include a penny-a-share gain from the sale of investments. PC-Sales Growth Slowed Down in Fourth Period, Raising Brows (Jan. 24) Company Profile: Dell Computer It said fourth-quarter revenue will be about $6.7 billion, about $800 million below expectations but up 30% from $5.17 billion in the year-earlier quarter. The company expects to report results Feb. 10. Dell also warned its sales gains are expected to slow this year. It predicted year-over-year revenue gains in the low 30% range, down from 38% growth last year and 48% growth in 1998. It was the second such warning in the past two quarters from the onetime highflier and follows a similar shortfall at PC maker Gateway Inc., which also blamed disappointing results on a business slowdown and chip shortages. Dell's stock fell $1.75 to $40.375 in 4 p.m. trading on the Nasdaq Stock Market. In after-hours trading, the shares were trading at $36.375. Analysts predicted a sell-off in PC stocks Thursday as investors see Dell's caution as a poor indicator from a leading business PC company. "We're seeing a secular growth rate that's slowing," said Ashok Kumar, a PC analyst with US Bancorp Piper Jaffray. "There will be a recalibration of valuations on the PC companies." Dell also said earnings gains will be slowed during its fiscal first quarter as it tries to stimulate demand. The company said first-quarter earnings may not exceed the $430 million of the fourth quarter and sales may be up just in the mid-single digits. "We need to kick-start the engine," Chief Executive Michael S. Dell said. "Clearly, this is the most significant shortfall this company has had since 1993," said Charles R. Wolf, an analyst at Warburg Dillon Read LLC. He said Dell now has such a large share of the business PC market that it can't continue to increase revenue at two to three times the industry's overall growth rate. Mr. Wolf said the company's problems signal that business hasn't rebounded since companies slowed PC purchases in advance of the year's end, due in part to a pause in spending as they made sure their year-2000 computer bugs were fixed. Unlike most other companies, Dell's fourth period finishes Jan. 28, which gave it an extra month to catch up. "Obviously, they weren't able to recover in January," he said. Dell made the announcement after the close of regular trading. "The biggest impact on our quarter was Y2K. We don't expect Y2K to come again," Mr. Dell said. The Y2K slowdown cost the company $500 million in sales, the company estimated. Dell had said it expected sales gains to consumers and small and medium businesses to make up for the lost business. "I don't think we correctly understand the impact on our business," Mr. Dell said. A second factor was Dell's inability to obtain components from Intel Corp. and Rambus Inc. Mr. Dell said the "lack of availability of key semiconductor components," largely microprocessors from Intel and memory chips from Rambus, contributed to about a $300 million shortfall in consumer PC sales. Earlier this month, Gateway also said it was unable to obtain sufficient supplies of chips from Intel. Like Gateway, Dell said it was unable to obtain sufficient quantities of Intel 450 megahertz processors. Dell had to offer customers more costly 500 megahertz processors and eat the difference. However, unlike Gateway, it doesn't plan to stop its practice of solely purchasing microprocessors from Intel. "You're not going to see us change our approach to partnering based on one difficult transition," Mr. Dell said. Dell's problems were caused in part by its strategy of rapidly embracing new component technologies, but that is risky if the suppliers can't deliver reliably. "Dell has always played at the leading edge of the [component] transition. The transition was not played well by a number of our partners. We were left with a shortage of high-end product," Mr. Dell said. Fourth-quarter results were also hurt by a one-time charge associated with its purchase of ConvergeNet Technologies Inc. The charge lowered earnings by one cent a share. Write to Gary McWilliams at Gary.McWilliams@wsj.com>>