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

To: kemble s. matter who wrote (153755)	2/11/2000 5:19:00 PM
From: Lucretius	Read Replies (1) \| Respond to of 176387

took you that long to think that up??? you need a new playbook, kiddo

To: kemble s. matter who wrote (153755)	2/11/2000 5:56:00 PM
From: calgal	Respond to of 176387

Hi Kemble! The view from Austin... :)Leigh "This isn't a surprise to Dell. When the company reported fiscal 1999 results a year ago, Chief Executive Michael Dell warned that growth would slow to the upper 30 percent range. But it took warnings from the company in the third and fourth quarters that sales would not be as strong as Wall Street was expecting for the message to take hold." "(Wall Street has) known that for a long time, whether it's been verbal or not," Johnson said. "But the market's the market. A lot of times it doesn't pay much attention. This is the wake-up call." austin360.com Slow quarter dampens Dell's year By John Pletz American-Statesman Staff Friday, February 11, 2000 Dell Computer Corp. put behind one of its toughest quarters in recent memory Thursday, earning only slightly more than it did a year ago. The company's $436 million profit met analysts' recently lowered expectations and underscored what Dell has been saying for the past year: The days of revenue and earnings growth at 50 percent a year are gone. "When you're a small company you can grow at that rate, but at our size it just isn't logical to expect. We think the low 30 (percent range), that's about it," said Dell Vice Chairman Kevin Rollins. Dell endured a difficult fourth quarter fraught with chip-supply problems and Y2K-induced skittishness among corporate buyers to eke out a 3 percent earnings increase from the same period a year ago. Net income was $436 million, compared with $425 million in the same period last year. Earnings per share rose to 16 cents per share, up from a 15 cents a year ago, thanks in part to Dell's growing investments in other young technology companies. Investment gains added 1 cent to per-share earnings. Sales were $6.8 billion for the quarter, up 31 percent from $5.2 billion a year ago. Dell's stock rose $3.23 to $38.80 in trading Thursday before earnings were announced, up 9 percent from Wednesday's close of $35.56. The price dropped to $37.88 in after-hours trading following the earnings announcement. The results were anticlimactic in the face of a warning from Dell two weeks ago that it would not meet Wall Street's previous estimates of 21 cents a share. "Obviously we were not satisfied with the results, and we're taking action to correct some of those issues," Rollins said of the fourth quarter. "But I think we're seeing a more stable component environment, and I think the Y2K issue is behind us." Full-year results were more positive with revenue of $25.2 billion, up 38.5 percent from last year. Net income rose 13 percent to $1.7 billion from $1.5 billion. Diluted earnings per share were 61 cents, up 15 percent from last year, including the one-time charge. Total shipments were up 50 percent for the year. "This is physics," said Jimmy Johnson, an analyst at A.G. Edwards & Sons in St. Louis. "There's nothing wrong with Dell's model or Dell. It's just the law of large numbers. They continue to take a lot of market share, overtaking Compaq domestically. But the overall model is starting to slow a little bit." This isn't a surprise to Dell. When the company reported fiscal 1999 results a year ago, Chief Executive Michael Dell warned that growth would slow to the upper 30 percent range. But it took warnings from the company in the third and fourth quarters that sales would not be as strong as Wall Street was expecting for the message to take hold. "(Wall Street has) known that for a long time, whether it's been verbal or not," Johnson said. "But the market's the market. A lot of times it doesn't pay much attention. This is the wake-up call." The company's stock remains 26 percent below its recent high of $52.69 in late December. A year ago, shares were trading at $48.50. Tom Meredith, Dell chief financial officer, noted that the company's lower growth rate is still much faster than the rest of the industry. "We continue to set the standard," he said. There were several bright spots for the company last year. Dell's server business grew 55 percent last year as it became the No. 2 server company in the United States and the world. Servers and notebooks, which have higher margins than desktop computers, now account for 45 percent of the company's sales, up from 37 percent a year ago. Dell's online sales, begun just four years ago, skyrocketed to about $40 million a day and account for nearly half of the company's revenue. Meredith and Dell spent most of their time during a 90-minute conference call after the market closed talking about the future -- especially the Internet. Dell's betting heavily that it can build on its own e-commerce expertise and growing lineup of servers and storage products to become a major provider of Internet hardware. Analysts estimate that U.S. companies will spend $200 billion a year on Internet systems by 2003. "We are in the exact spot where billions of dollars will be spent building online infrastructure," Meredith said. Analysts also asked whether the introduction next week of Microsoft's more powerful Windows 2000 would help increase corporate sales. Dell said he didn't expect any immediate impact because large corporations move more slowly than consumers. Sales are more likely to be affected in the second half of the year, he said. You may contact John Pletz at jpletz@statesman.com or 445-3601.