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

To: Gabriel008 who wrote (103057)	2/22/1999 8:43:00 PM
From: JRI	Respond to of 176387

Hi Gabriel... Sorry for the delay in answering your question from Friday (I was out all weekend, including Friday, and got in late last night)..although I know it was also posted as a general one.... Concerning any Q1 slowdown: My previous posts referred to TM's forecast (provided for the analysts) of mid-single digit growth in REVENUE (sequentially, from Q4 '98 to Q1 '99)...NOT units..... TM made a similar forecast the previous year (and revenue grew 4.89%, sequentially, from Q4 '97 to Q1 '98).. All statements I've seen demonstrate that TM and MD continue to see overall industry unit growth at 17% (for the next two years)...and that Dell will continue to grow at a multiple of that growth..TM comment about 1999 business "Very robust"....Last I checked, that is better than "robust" which was the typical word used in 1998..... As you know, in Q1, Dell gets a market share boost, due to the drop off in consumer (for others)..also, as Jim Kelley has added, it is likely that one (if not more) of Dell's rivals will have some inventory to work off in Q1....it seems improbable that all of Dell (indirect) rivals could have remained "untempted" in Q4 last year... I agree with you that even if Dell is going to enter sub-1000 during Q1...and I don't think they will, but let's assume something happens where Dell's lowest priced unit is selling in that range.....it is unlikely that this going to happen before April...and due to limited sales, will probably have a negligible impact on overall sales, ASP.. I think .34 is a more realistic target for this quarter....so (backing in to it...) I would anticipate a bit slower y-o-y revenue growth....44-45% y-o-y revenue growth...Revenue will be the driver this quarter....I think MD wants to see all this "Dell growing at 30% talk" (quite bogus actually....that even Kumar would keep quoting the 30% quote figure based on 1 quarter...and 38% at that)... But OK, so people are now talking 30%....this makes it more comfortable for a 45/45%+ revenue/earnings y-o-y growth parade... Dell's gotta do it, however.....30's % on the revenue line would not be good (after the announcement of the strong pipeline)... I feel very strongly that the y-o-y revenue growth number will be 45% or better... I'm gonna look at your other segments (that you listed) a bit later, and make (any) adjustments accordingly...

To: Gabriel008 who wrote (103057)	2/22/1999 10:37:00 PM
From: JRI	Read Replies (2) \| Respond to of 176387

Oh Gabriel..one last thing... We did not account for the split...which I think is worth discussion here.. It looks pretty likely that the analysts are going to settle for 16cents here (32 cents pre-split)...Given the lower expectations, I really can't see Dell allowing consensus to get to 16.5 cents (33 cents pre-split)...that would be out of the historical norm (last many quarters).. In estimating Dell's number, there is a big fat spot between 16.5 cents- 17.4 cents that would put Dell at 17 cents for the quarter..This would seem (by far) the most likely result....(note: pre-split, that would cover from 33 cents to 34.8 cents)...Your (bold) prediction of 35 cents would help eake out a 18 cents (really, 17.5 cents), but given the impossibility of knowing the end of the quarter close (even MD does not know it apparently a few days in advance..)...it would seem easier, and give more playroom to stay in the 16.5 cents-17.4 cents camp.. This would give Dell a nice 17 cent quarter....one cent above estimates...and, more than likely hitting the whisper (after all, is the whisper really going to go all the way to 18 cents, given the quarter Dell just had...that would seem screwy....I'm betting, even so early, on 17 cents).. But I think the real focus will be on the revenue number, and more specifically y-o-y growth.....As I previously stated, I really think MD will pull out all the stops to get the number in the mid-40's (at least)...That should allow for something in the 16.5-17.4 range....If we hit 45%+ y-o-y revenue growth...couple with high 40's earnings growth...I think that will keep any sell-off (post earnings) to a moderate rate...more like 10-15%.. My thinking is that we will see Dell run in its typical 2nd half of quarter fashion, however, because of last quarter, I don't see us taking out the old 110 high (or 55 post-split)....50-52 pre-earnings with a drop down to 45-50 post-earnings seems likely to me... Wow, how's that for specificity? I am feeling better and better about how I see the overall market (and have said the past couple weeks)...This has been your "typical" every 6-9 month...take-away-the-steam garden-variety correction in techs....Dell's action was made worse by the perceived bad quarter...but now that the big tech gods have been pounded...the Dow has caught its breath...and it is now clear (again) that the U.S. is enjoying a goldilocks...well, we are well-primed for some lift-off (despite high valuations) because of all the cash out there (compounded by the recent bear calls, and subsequently-developed cash piles by quite a few managers)...That money has got to go to work soon (end of March latest) and maybe much sooner.. I PM'ed BGR that I think the next 2 days could blow things open...Wednesday, MD goes on TV and gives his announcement...could rally the techs...If the markets continue today's rally tomorrow and/or Greenspan remains our best friend in the world....the market could really blow-out some shorts in the next couple days...The Dow is only 100 pts from a new high....Surely, breaking that on a closing basis would move some technical guys in the bullish camp...Additionally, other indicators (U.K. market back above 6000, France back above 5000, and if Germany can get back above 4000 in the next couple of days...plus the strong, recent action of the Nikkei (now well above 14000 as I write).... I guess the technicians complain about the A/D line...a few more days like today, and it, too, should be better shape.... So, there's my ad-hoc view...Even if I'm wrong short-term, I feel very good about Dell rallying nicely into next earnings....a real joker is the on-line service to be announced....also, maybe, finally, storage will kick in a bit...Cheers....