Scumbria & Intel Investors - What Company Bought 2 Million Intel CPUs this quarter?
Answer - Dell Computer !
Check out the following article on Dell's sales rate.
Paul
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news.com
Dell eyes shipment
milestone
By Corey Grice
Staff Writer, CNET News.com
September 18, 1998, 1:20 p.m. PT
In an industry fraught with turmoil, Dell
Computer continues to do well as it races
toward a new shipment milestone, selling
lines of highly profitable computers and
making strides internationally.
The company is on track for 2 million sales
this quarter,
according to various
estimates, a torrid
growth rate that is
partly being fueled by
$6 million per day in
transactions over the
Internet. Dell reached
the 1 million quarterly sale plateau in June
1997, almost a decade after going public.
Wall Street's faith in the company seems
exemplified by Dell's stock price. During the
recent stock market turmoil, the PC maker
slid 18 points from a near historical high. But
accounting for an intervening split, it is now
back to where it started.
Continuing strong sales and financial
performance for the Texas company come
as a result of a confluence of factors.
International customers, for instance, are
increasingly becoming more comfortable
with the direct buying model.
European sales rose 73 percent in the
second quarter, while growth is still coming in
the economically troubled regions of Latin
America and Asia. The company's
shipments grew five times faster than the
market rate during the second quarter,
according to various estimates.
Also, in the Japanese market--the
second-largest in the world--Dell continues to
excel, according Takahiko Umeyama, a PC
analyst at International Data Corporation.
This is despite initial expectations that
Japanese PC buyers would not take to a
direct sales model.
Dell is also feeling the effects of PC price
erosion less than other vendors because the
company mostly targets the performance end
of the market. The manufacturer's
hottest-selling computers contain a 400-MHz
Pentium II processor and a 19-inch screen,
according to Ashok Kumar, an analyst with
Piper Jaffray. The most popular machines
from rival Gateway, by contrast, are
lower-priced units based around the
333-MHz Celeron chip.
Consumer purchases also will likely boost
sales higher, others added.
"This Christmas, it's better to be a
higher-end guy because there are more
applications that require processor power,"
said David Wu, an analyst at investment
bank ABN AMRO.
Kurt King, an analyst with NationsBanc
Montgomery Securities, expects Dell to grow
rapidly internationally, despite the economic
turmoil in Asia, based largely on the strength
of its server line.
In addition, King said the company's
management can't be ignored. Like rival
Compaq, the financial results for Dell can't
be explained by external factors. "In
explaining the performance of these stocks,
a statistical analysis shows that
company-specific factors matter far more
than industry-specific factors," he said.
Kumar, who has given the company a "strong
buy" rating, also expects Dell's profit margins
to increase in the coming months because
the company has been able to take
advantage of drops in component cost
reductions.
Dell's component prices continue to fall
faster than sales prices and Internet sales
are increasing at a significant rate, analysts
say.
"While [average selling prices] were down 3
percent sequentially and 11 percent year
over year in the July quarter, we expect
component cost decline to have a steeper
slope, which should have a positive impact
on margins," Kumar wrote in a report this
week. Further, Dell has whittled its supplier
base down from hundreds of vendors to
fewer than 25 companies, and because of its
long-term contracts with those component
suppliers, "Dell has the pricing leverage," he
said.
Western Europe will continue to be a strong
growth region for the company, he said.
Meanwhile, Dell's Internet-based sales are
on the rise and the company recently
introduced a secure online transaction
guarantee, promising to reimburse
customers for credit card fines if a fraudulent
charge occurs on the Dell Web site. "This
new guarantee strengthens its leadership
position," Kumar said.
Dell spokesman Dwayne Cox said the
company does about $6 million in sales each
day on the Internet--up from $1 million per
day in March 1997--and "the goal is to, by
the end of year 2000, be doing half of our
business online."
Dell's Internet sales currently account for 11
percent of total sales, Cox said.
Related news stories
Second half looks better, for some September 11,
1998
Dell sees "great" quarter September 10, 1998
Dell closes the gap on Compaq July 27, 1998 |
