To: jim kelley who wrote (102273 ) 2/17/1999 9:56:00 PM From: Mohan Marette Read Replies (3) | Respond to
This just in-Interview- One on One With Michael DELL- [Must Read](courtesy:NBR) One On One With Michael Dell JEFF YASTINE: And joining us now is Michael Dell of Dell Computer. Mr. Dell, let me ask you first, what do you think about the company's earnings performance today? MICHAEL DELL, FOUNDER & CEO, DELL COMPUTER: Jeff, our earnings per share grew 55 percent, and the company's unit growth was 55 percent, or in other words, about 3.6 times faster than our industry. Our cash flow was $752 million, or another record, and on any relative measure compared to our industry, certainly Dell was the best performing company in our sector. YASTINE: There seems to be some perception, though, that perhaps the expectation was at least that perhaps Dell should exceed this, of course, as the company has in the past, and that there's more competition in doing what your company has done and certainly gotten the leg up in previous quarters. How much is the company prepared to further competition with your competitors? DELL: I believe what you'll see happen over the next few years is that we'll continue to grow much faster than our industry. There's a transition going on from indirect to direct, and Dell is the leader in direct by a wide margin, and I think stands the most to gain from that transition. The other firms have a cost structure which is in some cases almost twice the level of Dell's and are really struggling to approach our inventory efficiency, our activity on the Internet, which now is running at about a $5 billion run rate. And we also have an improving product mix with our highest growth coming from our most profitable products. YASTINE: Now, one thing that your chief financial officer said today was that the company could have been more aggressive in the pricing of the product. What did he mean by that? DELL: If you look at our fourth quarter results, it's clear that we could have achieved a lower operating income and a higher growth rate, and in fact, exiting the quarter, we adjusted our balance and have what we think is the strongest pipeline we've ever seen in our business. Once again, I think you'll see Dell grow much faster than the industry, as we did in the fourth quarter. You know, there weren't any companies that approached the growth rate of Dell in the fourth quarter, and I expect that this year, once again, we'll grow much faster than our industry. YASTINE: Will Dell compete on price? That's one thing you've consistently held out, that you won't compete on price. DELL: Well, Dell is a low-cost provider in our business, and our cost structure is much lower than our competitors. We believe that our pricing position is quite solid. In fact, no company can compete on price with Dell because, you know, without incurring a substantial loss, given the cost structure that we have. So clearly there's price competition in our business, with Dell being really the catalyst for that given our efficient direct business model. So I don't think it would be an accurate characterization to say we don't compete on price. However, it's also important to note that our business is not just about pricing. Services play a very critical role in the provision of the overall product in our business, and we're a leader there as well. YASTINE: One other question I wanted to ask you about was an announcement from the company regarding Ford (F), that Ford is going to standardize it's Intel-based PCs to all Dell units. I wonder if you could sort of elaborate on that or what it means for Dell? DELL: There's a move by global companies to standardize on one provider, and whether it is a company like Ford or countless other global companies, you know standardizing on not only just desk tops, but also notebooks and servers, we see this as a broad tend and certainly one that is beneficial to us. Because we have a direct presence in about 97 percent of the world's economy, we can serve these accounts directly without having to go through dealers or intermediaries. And we think our account wins in the global space have significantly outpaced our competitors because of the direct relationship. YASTINE: All right. We'll end it there then. Mr. Dell, thank you for joining us today. DELL: Thank you.
