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Technology Stocks : DELL Bear Thread -- Ignore unavailable to you. Want to Upgrade?

To: fred woodall who wrote (975)	6/2/1998 2:34:00 PM
From: fred woodall	Read Replies (1) \| Respond to of 2578

Dell finance chief, Thomas J. Meredith, Tuesday sought to ease investors' fears about falling PC prices. "There's nothing to be frightened about," Meredith said of the drop in average selling price reported in the company's first-quarter results. Meredith addressed a group at an investors' conference in New York. Concerns about Dell's slight decrease in PC selling prices and its valuation have contributed to a decline in its share price since the first-quarter report was released May 19. The stock (DELL) closed that day at $94.594, but has since dropped 17% to $78.313 at Monday's close. In afternoon trading, the shares were up $3.125, or 3.9%, at $81.438 on volume of 16.1 million shares. Average daily turnover is 16.6 million. Meredith said the recent price wars between International Business Machines Corp. (IBM) and Compaq Computer Corp. (CPQ) "eventually" will work out, resulting in the top five PC makers gaining a larger portion of the overall consumer market. He noted that right now, the top five PC vendors control only about half of the total market, but that is changing. In his bullish comments, Meredith also seemed to address investor concerns about Dell's valuation. He noted that Dell has grown by more than 40% a year for five years and asserted that Dell is trading "at a discount" to companies with comparable growth, such as retailer Home Depot Inc. (HD). Meredith flirted with the idea that Dell will meet analysts' expectations of hitting $17 billion in revenue this year, up from more than $12 billion last year. "We'll see how that plays out," Meredith said. Also, Meredith said Intel Corp.'s (INTC) decision to delay introducing its own Merced chip until 2000 could work out to Dell's advantage. "For Dell, it's not a significant aspect," he said. "It will give us a chance to learn about the high end of the market for six months more." Dell will perhaps address a sub-$1,000 computer when Intel introduces its second-generation chip for that market, which is code-named Mendocino. Dell, based in Round Rock, Texas, is a direct seller of personal computers noted for efficient production and low prices. The company again blew by its competitors in the first quarter, continuing the tremendous sales and profit growth that had pushed its stock to lofty levels. In revenue, the company passed IBM's PC division to become the world's second-largest PC seller. Dell's revenue grew 52% to $3.92 billion. Its top competitors - Compaq, IBM and Hewlett-Packard Co. - are trying to streamline themselves to match Dell's build-to-order and direct-selling efficiencies. But Dell isn't immune from trouble. The company stumbled before, during a period of hypergrowth in 1993. At that time, sales were more than doubling but the company botched a move into the retail market, had troubles overseas and misjudged demand in notebook PCs, which forced it to leave that business for a year while it redesigned products. It has fixed those problems and become the industry leader in keeping costs down. Separately, the Commerce Department said Dell's German unit will pay a $3,000 civil penalty for two alleged violations of the White House provisions that forbid companies from indirectly helping promote certain boycotts. The Commerce Department alleged the unit, in a transaction involving a sale to Saudi Arabia, furnished information regarding its business dealings with Israel. The department also alleged the company failed to report its receipt of the request for the information it furnished. The Commerce Department said Dell voluntarily disclosed the alleged violations. While neither admitting nor denying the allegations, the company agreed to pay the penalty.