To: Mick Mørmøny who wrote (32 ) 8/7/1998 12:55:00 AM From: jbn3 Read Replies (2) | Respond to
DELL #1 in serverstechstocks.com PC Segment - According to International Data Corporation, worldwide PC shipments in the second quarter increased just 7%, however we expect PC shipments to accelerate in the second half of 1998 driven by new lower priced processors from Intel, and the busy holiday shopping season. Longer term we are still in the early stages of the PC boom. Dell Computer (DELL 105 7/8) Michael Dell envisions connecting 1 billion PCs together one day, and only 200-300 million PCs have been sold to date. We are still in the early innings of what looks like a great ballgame, especially for a market leader like Dell. Dell Computer is the obvious pick of the box makers and for good reason. As reported by International Data Corporation, in the Wall Street Journal, Dell's revenues increased 70%, over same period year ago levels and the company is now shipping as many units as market leaders IBM and Compaq. Dell is number one in server shipments in the United States and number two worldwide, and is number two in the United States in workstations and fourth worldwide. These are important markets for Dell as they offset margin pressure from the low-end PC market (Dell's gross margins actually increased last quarter). Dell recently announced plans to enter the lucrative the high-end, data storage market. Compaq (CPQ 32) is another large cap box maker we find attractive. Compaq's channel inventory problem is behind them, with dealer inventory now at 4 weeks of supply, down from 10. Also, Compaq recently revealed the sub $1,000 PC segment is the company's most profitable PC market. We believe CPQ will earn $2.00 in 1999 placing a conservative multiple of 17 on the stock.
