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

To: Richard Tsang who wrote (80224)	11/14/1998 11:27:00 AM
From: Mohan Marette	Respond to of 176387

Richard: Share buy-backs,as you know,is a financial management tool employed by any successful company,the only problem is to do this one has to have cash and plenty of it.<g> Look at any successful company you'll know what I mean. Inventory improvement- Yes,Dell has improved the inventory turn as well by a full day,from 8 days to 7 (nobody even comes close), so at current levels it turns 52 times a year. I don't know they have booked any sales in advance but do note there is no compelling reasons to book sales in advance as Q4 is the strongest quarter for DELL. Lastly as a company DELL requires less working capital to operate than others in the industry on account of their business model and cash generated from operations for Q3 was a whopping +$500 million and I quote the company:- '...Dell generated $586 million in cash from operations. The company increased its cash and marketable securities to $2.8 billion, while repurchasing 18 million shares during the quarter. Dell has repurchased 360 million shares since its share repurchase program began in February 1996. With a return on invested capital of 190 percent, Dell continued to lead the industry in this key area of asset management efficiency. Inventory improved to seven days, equivalent to 52 inventory turns per year......

To: Richard Tsang who wrote (80224)	11/14/1998 11:41:00 AM
From: Chuzzlewit	Read Replies (2) \| Respond to of 176387

Richard, you raised two points: First, you raise the issue of share buy-backs and the ability of a company to manipulate earnings per share by repurchasing its stock. This really comes back to a point I made earlier concerning employee stock options. When a company buys or sells its own stock, those transactions are not accounted for as part of the income statement. Unfortunately, this completely obscures what is happening. It is a bad accounting practice (but fully within the spirit and letter of GAAP), and one that needs to be changed. Why are so few people upset about this? Second, I think you are off base on the inventory issue. If you recall, a couple of months ago Meredith said he had plans to reduce the days' inventory down to 5. Clearly, he is moving in that direction. Simply looking at an increase in DSO coupled with a decrease in inventory is a poor diagnostic for Dell because of its efficient manufacturing model and lack of intermediate channel. Add two further pieces of information, and you see why. First, sales normally increase in the fourth quarter due to seasonal buying patterns, and October is the first month of the fourth quarter. Second, the reduction in day's inventory amounted to only 1 day. So the greatest "stealing" would be around 1.1% (because there are 91 days in the quarter). TTFN, CTC