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Technology Stocks : Compaq -- Ignore unavailable to you. Want to Upgrade?

To: Elwood P. Dowd who wrote (89582)	2/8/2001 2:56:49 PM
From: Elwood P. Dowd	Read Replies (1) \| Respond to of 97611

Re: DELL cutbacks... uummmm ???? by: AFoolAndHisMoneyShallSoonPart (37/M) 02/08/01 02:48 pm EST Msg: 217285 of 217287 Reports out of Texas say that Dell is preparing to make the first layoffs in its history. The news will probably surface between now and next Thursday when Dell posts its fourth-quarter results. Insiders say they are expecting Dell to cut 2,000-3,000 people locally. Word on the street puts the total figure at 4,000 and insiders, who claim not to have heard that number, say it could refer to Dell worldwide. Dell currently employs about 36,500 people. The cuts are expected to trim fat and in that respect be somewhat across-the-board, but Dell is likely, sources say, to focus on units that are not producing sales. Dell is currently and quietly closing operations down. Yesterday, for instance, it shut down the Dell Marketplace, an online marketplace that only got started four months ago. It was intended to sell Dell hardware as well as office products from outside suppliers but had only signed up Pitney Bowes, Motorola and 3M so far. Dell is also expected to cease funding any long-shot or long-term technology and focus, as it has historically, on what can be productized immediately in volume. Insiders believe Dell's strategy will be to continue to push its PC business aggressively, sacrificing profits to market share, and try to drive at least one of its competitors, either Compaq or IBM, from the market. Ironically there was a rumor loose on Wall Street yesterday that buoyed up Dell stock that suggested IBM was interested in buying Dell. Maybe Dell will wind up taking over IBM's PC unit, or being IBM's supplier, a notion that has made the circuit before. IBM these days is less tolerant of the kind of losses it has suffered in its PC operation than it used to be. When Dell pre-announced a few weeks ago, it entertained the notion that it could overtake Compaq as volume leader (CSN No 385). If Dell seeks to accumulate more market share, it will just be a continuation of what it's been doing. It was willing to sacrifice its fourth-quarter margins to move iron and ensure revenues. Dell said, when it pre-announced, that its unit shipments grew four times the industry rate, estimated by analysts at 10%. Although Dell servers, storage and workstations have been enjoying significant growth - Dell estimated servers as being up 50% - its emphasis, insiders believe, will be on the PC. Dell warned that the quarter, which ended February 2, isn't going to be anywhere near what was hoped and that earnings per share will only work out to around 18 cents-19 cents, not the 26 cents that it had been optimistically forecasting. Revenues are still supposed to be up 25%-27% to somewhere between $8.5 billion and $8.6 billion, with net income up a "respectable" 16%-20% and an accompanying 2% increase in its market share to 12%.