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Technology Stocks : Dell Technologies Inc. -- Ignore unavailable to you. Want to Upgrade?

To: Mohan Marette who wrote (71986)	10/14/1998 2:46:00 PM
From: Dell-icious	Read Replies (3) \| Respond to of 176387

Must read, from thestreet.com: thestreet.com Top Stories: Driving Dell's Business Model By Eric Moskowitz Staff Reporter 10/14/98 1:46 PM ET AUSTIN, Texas -- Smart leaders hire smart managers. Perhaps that is what separates Michael Dell from some of his peers. While Dell weaves the vision for his company, it is up to Kevin Rollins, one of two vice-chairmen, to make sure the Dell (DELL:Nasdaq) machines hum without a murmur. Rollins runs half of Dell's worldwide operations, including the Americas region and the Pacific Rim, while Mort Tofler, the other vice-chairman, runs the rest. "Michael [Dell] really has hired Mort and myself to run the business, so he can spend his time thinking about customers, the company, technology, and where it's going." It's not easy being the leader in a market where everyone is queuing up to take away market share at the first sign of weakness. Rollins is concerned about almost everything and everyone. "We really believe [former Intel (INTC:Nasdaq) chief] Andy Grove's 'Only the Paranoid Survive,'" he says. "We eat, sleep and drink IBM (IBM:NYSE), Compaq (CPQ:NYSE), Fujitsu, NEC (NIPNY:Nasdaq), Toshiba to try and find out what the heck they are doing." It's no accident that Rollins, a former director at technology consultants Bain & Co., named a host of Pacific Rim computer manufacturers. He is spearheading the company's efforts in the dilapidated region, and personally launched Dell's new manufacturing facility in Xiamen, China, last year. Result? Dell had a 35% sales growth rate in China over the first half of the year. But China still plays a small part in Dell's overall plans. In fact, Rollins is quick to point out that Dell's Pacific Rim operations will not impact Dell's "top or bottom line" for at least two or three years. "We know there are some economic and exchange rate risks over there, so our operations over there will remain a very small piece of our total business," he explains. What about the region's continuing economic woes? Surprisingly, Rollins thinks a downturn in the economy might actually help Dell's business going forward. "We believe our model is sustainable, and may even strengthen a bit in the event of a downturn," he explains. "Look what happened in the Pacific Rim during that region's downturn." Over the first half of this year, Dell had a 35% year-over-year increase in Pacific Rim revenues, while much of the rest of the PC industry was struggling just to break even there. "I don't see any reason why we can't continue to be profitable over there," says Rollins, who also is responsible for Dell's worldwide sales and marketing. Many of Dell's competitors, by entering the sub-$1,000 PC market, seem to be sacrificing profit margins in the U.S. to maintain market share. But not Dell. Rollins argues that the company -- which recently branched out into selling servers -- will not play that game. "When the Japanese began making economy-box cars, American auto companies switched to minivans and trucks," he says "We are saying that we will always be competitive on the low-end desktop level." That's a jibe at IBM, Compaq and Hewlett-Packard (HWP:NYSE), who are struggling to keep PC margins healthy. "IBM's PC business has not been formidable and HP doesn't have as clean a product line," says Rollins, who adds disparagingly that Compaq bought DEC for its services business, and not for its notebook computers. Yes, Rollins sounds arrogant but he can since Dell hasn't disappointed its investors yet. But it could happen, and some Dell investors are worried about the company's reliance on Intel chips, especially after the chipmaker announced another delay in its 64-bit Merced chip. Rollins says Dell isn't lowering its forecasts to people because "there are plenty of legs left in the Pentium 32-bit architecture." Sure the delay could give Sun's (SUNW:Nasdaq) Unix servers a little bit longer period to run, but Rollins doesn't see a long-term impact. "The people we are talking to are still planning to go to [Windows] NT 5.0," says Rollins, who points to the company's growing server business as evidence. "Our server business can still grow significantly in these new markets whether or not Unix has another year of heyday or not." Dell currently has 8% of the worldwide server market and 20% of the U.S. market in terms of unit shipments, according to the latest figures from tech researchers International Data. Although Dell's PC competitors are busily switching to non-Intel makers such as Advanced Micro Devices (AMD:NYSE), Rollins stresses that he doesn't expect to lessen his reliance on Intel's chips. Another development that could burst Dell's balloon is a slowdown in information technology spending in 1999. Since the company has a large base of large corporate customers, including the U.S. federal government, analysts such as Steven Milunovich at Merrill Lynch argue that the first thing chief information officers will cut back on next year is PC spending. "You may very well see an IT downshift next year, but you also saw one in 1998," says Rollins. "This year, companies did shift some of this money to Y2K problems, and next year I believe they will be able to look past this and buy more hardware." It's not hard to deflect these potential dilemmas now, especially since Dell has been so adept in dealing with similar issues in the past. But in this market, where even good earnings numbers are not enough for skittish investors, any corporate spending slowdown could give Dell investors sleepless nights. Rollins insists, however, that investors shouldn't worry about its reliance on corporate spending or Intel because Michael Dell has a few more visions up his sleeve. "It's true, we have not implemented all of Michael's visions yet, but they are out there," says Rollins. Is there a limit to how high Dell can go? After applying its direct model to PCs, laptops, servers, workstations and storage equipment, what else is there for Dell to make? Anyone need a TV set? © 1998 TheStreet.com, All Rights Reserved.

To: Mohan Marette who wrote (71986)	10/14/1998 2:48:00 PM
From: T L Comiskey	Respond to of 176387

Sen wins this year..........Them Indians are SMART FELLERS ... EH Mohan ggggggggg ...T

To: Mohan Marette who wrote (71986)	10/14/1998 2:49:00 PM
From: Dell-icious	Respond to of 176387

Another must read, from thestreet.com: thestreet.com Top Stories: Touring the Defect-Free Digs at Dell By Eric Moskowitz Staff Reporter 10/14/98 1:46 PM ET AUSTIN, Texas -- You know you're in Austin as soon as you step off the plane because instead of seeing advertising for car-rental companies or Broadway shows, you are surrounded by ads for information-technology consulting, Samsung Semiconductor and the Dell (DELL:Nasdaq) factory outlet. It is odd to discover that Dell also sells refurbished PCs and peripherals in local outlets, because the company has seemingly mastered selling direct by phone or on its Web site. After all, CEO Michael Dell's direct business model and hyperefficient manufacturing method made him a multibillionaire and created hundreds of Dell millionaires. In the 1990s bull market, Dell is just about the best-performing stock in America. Even after this summer's technology-tinged collapse, the stock is up 131% year to date and an incredible 8,000% over the last five years, according to Baseline. To get that kind of performance, Dell has had to be one step ahead of its PC rivals. Now Dell is applying its proven direct-sales model for PCs to other products, including servers, workstations and, most recently, storage equipment. That can't be good news for its competitors, which are counting on these higher-margin areas to insulate them from the pricing war raging across the desktop computer landscape. To understand Dell's magic, take a look at its Round Rock, Texas, compound, where the company likes to show off its Metric 12 manufacturing facility, which produces 65% of the PCs made for its corporate clients in the Americas region. It's bright, squeaky clean and so closely monitored that the temperature never strays from 76 degrees, says Dell's senior operations manager, Bill Wischmeyer. It takes Dell just five hours to put together a PC for its mainly corporate customers, and five days to ship the final product out of the door. (See chart.) The standards at Metric 12, which will be replicated in China and Brazil over the next year, are so high that it has been declared a "defect-free zone." This means if there are any malfunctioning components, vendors such as Western Digital (WDC:NYSE), Quantum (QNTM:Nasdaq) and Maxtor (MXTR:Nasdaq) will replace them with no questions asked. What about Dell's inventory? It's sitting outside Metric 12 in 35 nondescript trailers. When one of the trailers gets light on inventory, one of Dell's vendors nearby rolls up with another trailer, full of motherboards, PC cards and all the other guts of the PC. No wonder the company only has eight days of inventory -- the best in the industry. This translates into a huge cost advantage for Dell. With component pricing falling at an average of 1% a month this year, holding large inventory is a costly business. Dell is replicating its direct model to build servers, storage equipment and workstations, three product lines that should sport even better margins than its desktops. In the next month, Dell is opening a plant that will exclusively build servers and workstations near Metric 12, says Wischmeyer. Already, its server business -- using the same build-to-order model it uses for its PCs -- has zoomed up the market-share chart. Dell's Five-Day Manufacturing Model Day Location Action 1 Call Center Order received 2 Production Control Production unit makes sure Dell has all the PC parts it needs for order. 3 Accounting Order spends a day in company's accounting unit. 4 Manufacturing PC is made Step 1: Kitting Assembling all the parts needed per unit into a box. Step 2: Build Employees put together PC and quick-test each unit. Step 3 Extended test If there's a problem in the PC quick-test, it goes here for more extended tests. Step 4: Boxing the PC The box or tower gets boxed and then shipped to the distribution center. Manufacturing Time: Around 5 hours. 5 Distribution center This is where Dell places all the necessary peripherals in the box for shipment. "We have gone from No. 9 in the server market, with a less than 2% market share in 1996, to a No. 2 position and a 20% share in the U.S.," boasts Scott Weinbrandt, Dell's director of server brand marketing. Dell now is fourth in worldwide server market sales, with 11.3% share of unit shipments, according to International Data. The company is now ramping up its storage business, a strategy to give Dell a more comprehensive package of hardware products for its enterprise clients, says Weinbrandt, who counts EMC (EMC:NYSE), Storage Technology (STK:NYSE) and IBM (IBM:NYSE) as its biggest competitors in this space. "We want to pass along storage models at lower price points than our competitors who have been gouging customers for years," says Weinbrandt, who confidently added: "We will never be undersold on price." This can-do confidence also can be found in Dell's sales force, which resides in Building No. 3 at Round Rock. This is where deals are done. The 200-strong sales force is broken up into regional teams with very specific performance goals tied to employee compensation. Some more creative team names are the New York Mobsters and the Mid-Atlantic Maniacs. Why do you need a sales team if Dell's direct-order model is wowing fans and rivals alike? To get the big corporate accounts, Dell gives its larger enterprise customers steep discounts that make Dell's prices comparable to its top competitors', says Eric Brown, Dell's national business development manager. "We couldn't have our kind of revenue growth if we didn't do this," whispers Brown. That might explain why, in its most recent quarter, Dell's revenue was up 54%. Brown adds that employee compensation is now also tied to selling higher-end server and workstation products, perhaps another reason why Dell's gross margins have remained stable this year in the face of all this price competition from Compaq (CPQ:NYSE) and Hewlett-Packard (HWP:NYSE). In its July quarter (Dell's fiscal year ends in January), gross margins edged up to 22.7% from 22.2% in the year-ago quarter. The company also seems to be ahead of the pack in Internet sales through Dell Online, which account for $6 million a day, or between 11% and 12% of the company's revenue. But ever the taskmaster, Michael Dell wants 50% of revenue to come from online sales by January 2001. To keep its best customers happy and loyal, Dell Online has set up 7,000 personalized, password-protected intranet sites called "Premier Pages" that can be used by companies to get prices, company discounts and the latest product releases. "And we can put these up for a company in 24 hours," says Michael Swart, Dell Online's head of personalization and publishing. Dell's move toward e-commerce and higher-end products is no surprise: In fact, all of its competitors in this space are moving that way as well. But when Dell decides to go in a certain direction, it simply executes better than its peers. Although it was a late entrant into the server sweepstakes, for example, Dell showed server sales growth last year of 208% over the year before, by far the best in the industry. And it should be able to make similar inroads in the storage market. How can you be sure? It's the business model. © 1998 TheStreet.com, All Rights Reserved.