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Strategies & Market Trends : Roger's 1998 Short Picks -- Ignore unavailable to you. Want to Upgrade?

To: Don Westermeyer who wrote (9624)	6/3/1998 6:47:00 PM
From: craig crawford	Read Replies (1) \| Respond to of 18691

The S&P 500 cash closed at 1082.73 Here is a cash quote quote.yahoo.com^SPX&d=t The futures are trading about a point below that. On a seperate (and DELLiciously positive) note: ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ Wednesday June 3, 3:52 pm Eastern Time FOCUS-Dell -Europe to drive strong growth By Neal Boudette LANGEN, Germany, June 3 (Reuters) - Dell Computer Corp (DELL - news), shrugging off falling PC prices and a microchip delay, said on Wednesday it expected its surging European business to help it outpace the growth of the overall industry this year. Dell, whose European sales grew 62 percent in the three-month period that ended May 3, expected no let-up in a pace that has seen the company average sales growth of 50 percent in each of the last five years. ''We've been growing much faster than the market and I don't expect that to change,'' Chairman and founder Michael Dell said at a news conference at its German headquarters. The company also said it aimed to counter declining prices by reducing its already-low inventory costs, and said it was getting ready to open plants in China and Brazil that could each anchor billion-dollar markets in the next several years. Vice Chairman Morton Topfer, in an interview with Reuters, said he was comfortable with analyst estimates that fiscal 1999 sales would rise to between $17 billion and $18 billion, from more than $12.3 billion in the year that ended February 1. Europe, where Dell has 8.3 percent of the market, would probably be the company's fastest growing region this year. ''We are the third largest PC company in Europe and I expect there's a good chance we will be number two this quarter,'' Topfer said. To maintain profits against falling prices, Dell is forging Internet links with component suppliers to halve inventory costs from levels that are already lowest in the industry. ''We have eight days of inventory now, but I think we can cut it in half again,'' Topfer said. ''We should be able to cut it down to four or five days.'' In the first quarter of fiscal 1999, inventory control helped Dell keep costs down so that its gross margins rose slightly, even as the average price of the PCs it sold fell by eight to nine percent, Topfer said. Dell's gross margin firmed to 22.3 percent from 22 percent in the fiscal quarter that ended May 3, he said. Since the prices of computer components fall about one percent per week, reducing inventory on hand has become a critical challenge for PC makers. Dell, already a pioneer in selling PCs to end customers over the Internet, turns over its inventory faster than almost all other PC companies because it only makes a PC after it has a firm order from a customer. Other vendors that hold completed PCs in stock often carry 20 to 40 days of inventory. The company now rings up $5 million in sales over the Internet each day, and aims to draw half of its sales from electronic commerce within two year. For medium-term growth, Dell is looking toward non-U.S. markets, which only generate 35 percent of sales now. Later this year, Dell plans to open a plant in China that will begin selling PCs directly in a country where Topfer said sales are growing 40 to 50 percent a year. ''China is less than $100 million in business for us today, but it can be a billion-dollar market for us,'' he said. Similarly, Dell plans to build a plant in Brazil next year. ''South America probably has the potential to be a billion-dollar market too,'' he said. Michael Dell said the six-month delay in the arrival of Intel Corp's next-generation Merced processor won't make much of a difference to his company or the PC industry. Merced is designed for high-end computers running mainframe-class programmes that evolve much more slowly than mainstream PCs, he said. ''Actually it gives us a little more time to get ready for it,'' Dell said. Intel said last Friday that Merced would be available in the year 2000, and the news sparked a drop in Intel shares that dragged down other technology stocks. Topfer said he expected Intel to meet the new delivery target without further delays. ''I think they have a very, very high probability of achieving that shipment date,'' he said. Dell noted that his company will offer a machine next year that runs eight Pentium II processors. ''That will give us the opportunity to grow even without Merced,'' he said. ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ Now why would anyone want to short this DELLuxe company?