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

To: Mike Van Winkle who wrote (157910)	6/14/2000 8:37:00 AM
From: Fangorn	Read Replies (1) \| Respond to of 176388

Mike et al., In the Journal today... interactive.wsj.com@6.cgi?id=SB960928954489671756.djm&template=pj1-combo-nf.tmpl Boss Talk Michael Dell Stays Focused As He Guides an Online Giant By NEAL E. BOUDETTE Staff Reporter of THE WALL STREET JOURNAL LONDON -- Michael Dell started Dell Computer Corp. in a college dorm room to sell built-to-order personal computers directly to customers. Sixteen years later, the company has $33 billion (35 million euros) in annual revenue. Since 1994, he has turned the company's focus to the Internet. Today its main Web site, Dell.com, generates $25 billion in annual sales, a revenue stream more than four times greater than the top 10 consumer electronic-commerce sites combined. If Dell.com were an independent company, the Web site would be No. 179 in the Fortune 500. Mr. Dell spoke to staff reporter Neal Boudette at the Wall Street Journal Europe's CEO Summit on Converging Technologies. Q: You have a huge business on the Web and even have sites that sell other electronics like digital cameras. How far do you want to take Dell as an e-business beyond the computer industry? A: We have 11% market share globally. Expanding market share could be very lucrative for us. Having said that, there are large adjacent opportunities in services, consulting, leasing. The challenge is picking the areas that are going to deliver the most for us and our shareholders ... . There's no doubt you could apply Dell's business system to a lot of products, but we found real value in focusing our business and not trying to get into every imaginable product category. Q: Is that a mistake many dot-coms have made -- not enough focus and trying to do too much? A: If you can listen to the financial markets in a short-term context, you can be quite confused. With all due respect to CNBC, sometimes I call it the CNBC strategy. You see what's on TV, listen to what people want to hear, and that's your strategy for the day. And that's not too far from the truth the way some of these companies were operating. The laws of economics have not been repealed. Things like cash flow and profitability are still very important. Q: So it's safe to assume you won't reach a point where Dell doesn't manufacture PCs anymore? A: I think that we will be manufacturing computers for a long time. If you look at our manufacturing assets in dollar terms, they are pretty small, roughly six or seven weeks of cash flow. But we've connected ourselves with the capital-intensive suppliers, the Intels, the Solectrons, who supply factories for us in real time. Last quarter we had a record return on invested capital of 292%, which speaks to the efficiency of all this. Q: Dell's build-to-order model is often studied by companies like Ford and GM in other industries. What lessons can your transformation into an e-business offer company outside the computer industry? A: One is that you can replace physical assets with information. Data is much easier to manage than inventory, which devalues, takes up space. Data is more friendly. We operate with six or seven days of inventory whereas our competitors and their distribution channels have 10 times that. In a business where the inventory devalues 1% per week, that can be devastating. Another lesson is that companies historically did everything themselves. Now with the Internet, companies can connect themselves together. In my view, all companies ought to do what they are really good at and find other companies to do everything else. Q: How do you balance the demand of keeping Dell ahead on technology while also pushing the development of the company itself in to an e-business? A: We've found the best way to organize a large business is to think of it as lots of small businesses. Divide and conquer. Instead of having massive departments, we segment our business into customer-focused groups. They have P&L and balance sheets and accountability over the decisions they need to make, so you don't have decisions rolling up into some central place in the company slowing us down. That has helped us organize for speed. Q: What do you think of the Microsoft decision? A: I 'd rather not get into the merits of the case. A large portion of our customers like Microsoft products. I don't think that's going to change in the near-term whether it's one company or two companies. Q: But Dell was cited as one to the companies that gets more favorable prices than smaller PC manufacturers. If they split the company, won't you have to pay higher prices? A: There's public documents that suggest that there are differences in the pricing. But we're talking about 50 cents, a dollar on the price of a PC. Some of the documents suggest that we were not getting the best prices. I really don't know what other companies pay ... but if all competitors had the same price for the operating system, I don't think it would have much of an impact. Q: Mobile technology is more advanced in Europe than the U.S. How are these wireless technologies going to affect your business? A: I think next-generation technologies like GPRS (General Package Radio Service) are actually going to have more benefit to mobile computers than to mobile phones. The handset guys will claim your mobile phone will have a little camera and a postage-stamp-sized picture of your sweetie on the over end of the phone. I think a better GPRS application is a Dell notebook that has GPRS and can reach the Internet from anywhere in the world without a phone line or a phone. That is an application we are working on now. Write to Neal Boudette at neal.boudette@wsj.com