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

To: D. Swiss who wrote (160499)	9/8/2000 3:38:15 PM
From: Maverick	Read Replies (1) \| Respond to of 176387

HIGHLIGHTS FROM DELL PRESENTATION AT SSB TECH CONFERENCE Dell Computer (DELL) DELL: HIGHLIGHTS FROM DELL PRESENTATION 2H (Outperform, High Risk) AT SSMB TECH CONFERENCE Mkt Cap: $119,879.0 mil. September 6, SUMMARY 2000 * Dell CFO Jim Schneider presented at the annual Salomon Smith Barney Technology Conference in New York yesterday. PCS * Management reiterated guidance for full FY01 revenue growth Richard Gardner of 30%. * US corporate demand seems to have rebounded nicely. European corporate demand, however, continues to be weak. Cynthia Hiponia Schneider points out that Dell does not need a significant q/q ramp in Europe until 4Q. * Schneider anticipates significant q/q growth US Federal Government this quarter, but not of the same magnitude as in prior years. * Component availability remains good, with issues only in high-end Intel processors. DRAM prices remain below the company's plan for 3Q. * Reiterate 2H rating and $55 target. Yesterday at the annual Salomon Smith Barney Technology Conference in New York City, Dell CFO Jim Schneider provided an overview of Dell's business strategy and an update on current quarter trends. Schneider cited recent independent surveys suggesting that some 78% of Fortune 500 Chief Investment Officers expect to spend more on hardware over the next 12 months than they did in the prior twelve. Dell believes it is well positioned as the #1 worldwide vendor in workstations, #2 in desktops, #3 in notebooks and #6 in external storage. Dell characterized its top growth opportunities as 1) the high-end market (servers, storage, workstations and notebooks), 2) global expansion (China, India and Brazil), 3) services (e-Consulting, leasing, e-Support and hosting), and 4) a continuation of the company's superior execution using new tools such as DSi-2, PremierDell.com and Dell Ventures. On the component front, Schneider commented that the quarter is off to a good start. While components continue to require day-to-day management, the only significant constraints appear to be high-end Intel processors (Xeon, Pentium III 1.13GHz). DRAM pricing has risen since the July quarter, but remains below Dell's internal forecast. This suggests the potential for gross margin upside and/or greater than expected pricing flexibility during the third and fourth quarters. On the demand front, Schneider cites solid demand from large US corporations, but continued demand softness from European corporations. Schneider points out that Dell does not need a rebound in European corporate until 4Q in order to achieve the company's 30% top line growth target for the full year. In US Federal government, Schneider commented that Dell is expecting significant q/q growth this quarter, but probably not the same ramp as in prior years. In general, it appears that Dell has tempered its internal expectations with respect to US Government and Europe for the next several quarters, but believes that better than expected demand from large US corporations will still carry the company to 30% top line growth for the full year 2001. Schneider reiterated his recent guidance for full fiscal year 2001 revenue growth of 30%. We continue to believe that 2Q weakness in US Government may be a harbinger of weaker than expected demand in 3Q (US Government's contribution to overall results peaks in 3Q). We are also concerned that Europe may not return from its July/August vacation ready for a major corporate upgrade cycle; we view this as a necessary event in order for Dell to achieve its 30% top line goal for FY01. September is the key month in US Government and the next six weeks should yield more visibility into the potential for a European rebound. By the time of the company's analyst meeting in early October, we should have significantly more visibility into P&L prospects for 3Q and 4Q. In the meantime, we reiterate our Outperform (2H) rating on the shares.