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

To: Jean M. Gauthier who wrote (115487)	4/9/1999 10:16:00 AM
From: Ian@SI	Read Replies (5) \| Respond to of 176387

SmithBarney notes Part 3 Services Kevin Rollins, Dell Vice Chairman, provided an update on the company's evolving services strategy. Key points were as follows. Dell intends to drive services attach rates. Dell will continue to partner with best-of-breed third party providers for most on-site services, but will expand its own field engineering capabilities in the near-term to speed adoption of certain high-end technologies. Dell has 500 full-time field technical and systems consultants. Services currently represent $1.4 - 2.0 billion of Dell's $18 billion in revenue and carry gross margins which, in most cases, are significantly higher than the corporate average. Our sense is that Dell intends to increasingly treat services as a separate profit engine. Consumer and Small to Mid-Sized Business Paul Bell, Senior VP of Dell' consumer division, provided an update on Dell's consumer business. Key points were as follows: The consumer/SMB business is on a $3 billion annual run-rate, with units up 80% during the last two years. Slightly less than 50% of this $3 billion is consumer, with the balance being small to mid-sized business. According to Bell, Dell's U.S. consumer/SMB division is quite profitable, falling in the middle of a ranked list of customer segment profitability by geography. The lowest all-in price (including monitor) of a Dell Dimension desktop is now $999, down from $1,799 one year ago. The $999 desktop, fully loaded, is a profitable product for Dell. Dell is now beginning to include sub-$1,000 systems in print advertisements. According to Bell, the keys to profitability at the $999 level are as follows: 1) to reduce operating expenses associated with these sales; and, 2) to sell more add-ons and peripherals with each system. Currently, 38% of the total margin in Dell's consumer business comes from non-system items such as printers, financing and extended warranties. Dell will increasingly focus on capturing Internet Service Provider and advertising revenue. There is a perception in the marketplace that Dell has been less innovative than the competition with consumer ISP and financing initiatives--according to Bell, this will change. Dell will increasingly focus on innovative industrial design within the consumer/SMB division (a la iMac). Dell is very focused on DSL and cable. The company now has agreements with virtually all RBOCs and cable companies to capture bounty for signing customers up with these services. Servers and Storage Mike Lambert provided an update on Dell's server and storage business. Key points are as follows: In late 1998, Dell began winning some large accounts by leading with servers and storage instead of desktop and notebooks. Dell believes that it continues to take server market share from Compaq. The company now has 300 customers of PowerVault storage products. To date all PowerVault storage has been directly attached to one or more Dell servers. Storage represents 40-45% of a typical server sale. SCSI remains Dell's high volume storage product because of the higher cost of Fibre Channel, however, Dell is working to lower the cost of Fibre Channel. In early Fall, Dell will add remote repair, diagnosis and healing software to all Dell servers. Dell has a 4 month backlog in its existing 64 bit product/application testing labs. Demand for these services has been so great that Dell has plans to add several new labs worldwide. Lambert believes that most of the UNIX to NT migration that was going to take place this year has already happened. Large corporations started to freeze their software archtectures in 4Q98 and 1Q99. By mid-1999, they will also freeze their hardware archtectures, which will place a freeze on hardware rebids in large accounts. Dell - IBM Agreement Dell CFO Tom Meredith also made several comments regarding the recently signed agreement between Dell and IBM. According to Meredith, Dell signed an intellectual property agreement with IBM five years ago which granted Dell access to IBM's patent portfolio. The recently announced agreement represents a renewal of that prior agreement. Meredith suggested that the agreement was partially signed in recognition of Dell's ability to bring IBM technologies to market much more quickly than IBM. According to Meredith, if IBM continues to execute as well as it has recently, there is potential for IBM component sales to Dell to exceed $16 billion during the coming seven years. Meredith also suggested that there could be other dimensions to the IBM-Dell agreement, but would not comment specifically on what those dimensions might be. Summary In general, we would characterise the tone of the meeting as positive, but probably not sufficient to support the recent rally in Dell shares. Management did clearly indicate that analysts should not revise their growth expectations based on the opportunities discussed at the meeting. We maintain our Neutral rating on Dell shares.

To: Jean M. Gauthier who wrote (115487)	4/9/1999 10:18:00 AM
From: Mohan Marette	Respond to of 176387

A a trillion here a trillion there pretty soon you are talking big money. Sure,I am not but a lot of countries count on Japan for credit.As for Japan's perceived troubles,well it runs in cycles all countries go through it no exceptions, biz rags comments notwithstanding.

To: Jean M. Gauthier who wrote (115487)	4/9/1999 10:50:00 AM
From: edamo	Read Replies (1) \| Respond to of 176387

jean...re japan.. how much consumer debt does the average japanese family have...and what is the average family savings...compare this with the same usa family... insurmountable problems....no more insurmountable than being the only peoples who have snapped back from nuclear holocaust.. i put "faith" in what i know...not always what i read...the japanese economy is at this very moment coming back...yes it will take awhile..but it is much more resilient than you/forbes/business week believes...this "recession" was the first post war setback realized..they are making psychological adjustments and moving forward...they mimic our growth, with about a twenty year lag time....remember the insurmountable carter administration inflation rate...or the huge deficit caused by defense spending during the nam conflict...i do...all things will come to pass...good luck, ed a.