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

To: Sr K who wrote (153560)	2/10/2000 6:36:00 PM
From: Dorine Essey	Read Replies (1) \| Respond to of 176387

By Jeff Franks HOUSTON, Feb 10 (Reuters) - A shortage of key computer components that cut into Dell Computer Corporation's fourth quarter earnings is "getting better," but the company's sheer size means that the days of 40 and 50 percent revenue growth rates are past, Dell Vice Chairman Kevin Rollins said on Thursday. He also said computer component prices are more stable than they were in the second half of 1999, but that also means prices are not coming down as fast as they did in the past. Dell said on Thursday that it earned $436 million, or 16 cents a share, on revenues of $6.8 billion in the fiscal fourth quarter that ended Jan. 28. That was well below initial expectations for the quarter, but Dell had warned two weeks earlier that an "inconsistent flow of key semiconductor components" and sales slow to rebound from Y2K fears would hurt results. Rollins told Reuters in a telephone interview that the key problem in the last quarter was Intel Corporation's inability to deliver a consistent supply of high-end computer chips. "It's getting better," Rollins said. "We're not completely out of the woods on it yet, but in general lead times have come back down and therefore customers have been buying pretty aggressively on the high-end systems." "We don't anticipate we're going to have any difficulty with our processors like we did in Q4," he said. Rollins said a balanced supply and demand environment for many computer components had stabilized prices. "I think we're in a much more stable pricing environment now and don't have quite the swings that we saw in Q3 and Q4 in terms of availability," he said. The downside of that, Rollins said, was that component prices were "not declining quite as rapidly as they had historically." Dell said in its January profit warning to expect revenue growth rate in the low-30 percent range and net margins in the low to mid-7 percent range for the current fiscal year. Rollins said those predictions were unchanged and that the lower growth rates were now built into the company's forecasts for the foreseeable future. In the past, Dell historically grew at 40 to 50 percent rates, but its sheer size prevents that now, he said. "We believe that's (30 percent) a kind of prudent level to set expectations and to try to run our business toward, predominantly just because we're getting so big," Rollins said. "It's kind of hard to assume that you can grow much faster than that with a reasonably managed eyed," he said. "I think that's what we're trying to tell everybody -- that's a more prudent management growth level for us." The slowed growth rate was particularly notable in Dell's large business customers segment, where revenues rose just 20 percent, compared to 31 percent for the whole company. Rollins said Y2K slowed large business sales more than expected. "January was slower than we thought in the large corporate space. We anticipated that February would be slow too and that as we moved through the quarter, the ramp would pick up," he said. "We've seen nothing that would change our belief that that's the story out there. We're talking with customers and they're still anticipating buying," he said. REUTERS Rtr 18:06 02-10-00