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

To: Boplicity who wrote (114004)	4/3/1999 5:56:00 PM
From: jbn3	Read Replies (4) \| Respond to of 176387

DELL & IBM = synergy at work Following link courtesy of LONGonDELL: Message 8652655 ... US-based IBM's PC business is beginning to become a burden to the company. Last year, only the PC-related operations showed a deficit - of $1 billion - while the company as a whole showed favorable growth. This clearly shows that its PC business is pulling IBM down. On the other hand, its OEM business of providing competitive companies like Dell Computer with parts and components such as HDDs and displays is growing quickly. The emphasis of the PC business is being shifted from "completed products" to "parts." Many observers are calling for IBM's withdrawal from the PC market. ... This link (IBM 1998 Annual Report, Note y, segment information) shows that IBM's personal computer segment has been showing increasing pre-tax income (losses). (1996=>$39; 1997 => $161; 1998 => $992 million). Even the server and technoloy area showed declines, though not actually losses. ibm.com "The PC Era is Over" Louis Gerstner, Chairman's letter, IBM 1998 Annual Report" ibm.com ... • The PC era is over. This is not to say that PCs are going to die off, any more than mainframes vanished when the IBM PC debuted in 1981. Indeed, IBM's own PC business was an important turnaround story in 1998. But the PC's reign as the driver of customer buying decisions and the primary platform for application development is over. In all those respects, it has been supplanted by the network. "Nevertheless, IBM remains committed to its PC business..." (open letter from David Thomas, Senior Vice President, Personal Systems Group) pc.ibm.com ... Let me be clear: I do not condone or excuse our business shortfalls, nor should any business owner or executive do so. The PC industry is strong, and we're in it to win. Analysts are projecting near double-digit revenue growth for the PC industry through 2002, with even higher revenue growth in the mobile and server parts of the business. We are determined to return PSG to profitability, not only because of our rich heritage and the pride we have in ourselves, but because of our commitment to IBM shareholders and customers. We have addressed and will continue to address those issues that affect our profitability. IBM is committed to not only staying in this business but to leading the industry. A majority of our customer bids have a PC component, and having a PC offering allows IBM to compete for a full-service solution -- not only to our large customers, but to the small- and medium-sized businesses, the fastest growing segment of the IT marketplace. OPINION: IBM's PC business is currently a liability and is likely to remain so, despite Mr. Thomas's protestations to the contrary. Magician's trick: How do you turn a liability into an asset? Eliminate IBM's final assembly and production, turning that function over to DELL with its greater efficiencies. I don't care whether you call the finished product a "DELL with IBM inside" or "IBM built by DELL" -- IBM still sells the components, gains better control of inventory, still manages the service end, and eliminates a non-profitable sector. Now, if DELL and IBM were to agree to some sort of production partnership, the combining of the #2 and #4 worldwide producers might require a greater production capability. And DELL announces new production facilities (thanks to Mohan Marette): Message 8647854 ... On Wednesday, Dell Vice Chairman Kevin Rollins told the Austin American-Statesman that the company will add a second manufacturing plant and an office building on the 570-acre campus it opened last fall in Northeast Austin. Those buildings and three office buildings under construction on its 350-acre Round Rock campus will accommodate 4,700 new employees this year, lifting Dell's total to more than 22,000, Rollins said. ... He said Dell, the world's No. 3 PC maker, has not decided whether the first Tennessee facility will be an office building for such jobs as technical support and customer service or whether it will be another manufacturing site. A spokesman for the Nashville mayor said Dell indicated it wanted a 1,000-acre site but that Davidson County, which includes Nashville, did not have a site with that much land. ... MORE OPINION: Well folks, it looks to me as if DELL management thinks there is some room for growth. I think this fits in nicely with the DELL/IBM deal, too. Shorts might want to bear in mind that DELL has an analyst meeting scheduled for this week. (8 April, I think) DELLish, 3.