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

To: gnuman who wrote (117046)	4/13/1999 2:25:00 PM
From: Mohan Marette	Read Replies (1) \| Respond to of 176387

Oh geez you have a point!<eom>

To: gnuman who wrote (117046)	4/13/1999 2:33:00 PM
From: Mohan Marette	Read Replies (1) \| Respond to of 176387

THE ULTIMATE PC MARKET- (and this is my point in case you are interested) The ULTIMATE PC MARKET -That's China. America's Dell wants to crack it Dec.04,1998 By Andrea Hamilton / Penang Source:Far Eastern Economic Review -------------------------------------------------------------------------------- SUCCESSFUL COMPANIES ATTRACT DOOMSAYERS and cheerleaders. So when Dell Computer Corp. decided to take its direct-sell, build-to-order business model to China in August, some suggested the Texas-based PC maker would hit a Great Wall. Says Peiris Feng of Beijing Founder Electronics: "A computer costs an entire year's income for the average Chinese. They want to buy face-to-face." He says customers won't - or can't - order computers sight unseen by telephone, much less over the Internet. Most don't even have credit cards. Tell that to Dell. The company's experience indicates that people do respond to the build-to-order concept. Proof: Dell's sales in Asia were up 49% in the three months to Nov. 1, besting the previous quarter's 34% gain - and that was during a period when total PC shipments throughout the region fell 2.3%. Worldwide revenues jumped to $4.8 billion, up 51% from the same quarter last year. Profits are 55% higher at $384 million. So Dell is moving aggressively in China. After opening a manufacturing plant in Xiamen in Fujian province, it launched direct sales and technical support services in nine major cities, including Beijing and Shanghai. Expansion amid economic uncertainty "is a sign of our confidence," says Dell vice chairman Morton Topfer. China - currently the fastest-growing PC market in Asia and soon one of the world's largest - is essential if Dell is to maintain compound annual growth of 53%. Research group International Data Corp. (IDC) ranks Dell seventh in PC shipments to Asia Pacific, excluding Japan. "They need to play in China or they will never be able to compete in Asia," says Dane Anderson, head of computing systems at IDC in Singapore. "In markets where they don't go direct, they suffer from an identity crisis. They are good at leveraging the inherent advantages of the direct model." How well? Look at the numbers. Dell's annual sales have boomed from $3.5 billion in fiscal 1995 to $12.3 billion in fiscal 1998. Earnings rocketed 533% to $944 million in the same period. Dell has displaced larger rivals such as IBM to become the world's second-largest PC maker after Compaq, which is now trying to emulate its direct sales strategy. While other makers struggle to unload inventory overhang that drops in value by the day, Dell has no such problem. The company does not build a box until the order is placed. At Dell's plant in Penang in Malaysia, only seven days' worth of parts are stocked. At Texas headquarters, it's eight hours. "Old PC technology is like fruit," says Topfer. "It turns bad very quickly." All this helps Dell maintain profit margins of about 23%. On average, it takes less than six hours for a PC to be assembled, boxed and loaded on to a truck. (A more complicated server computer takes up to a day and a half.) Across Asia, customers receive their PCs within seven working days. Less reliance on distributors has also proved a blessing, as cash flow and payment collection have been sore spots for conventional manufacturers during the economic downturn. Dell, which focuses on the corporate market, deals directly with its clients for payments. Individual consumers pay by credit card when they place an order, so Dell has its money before the computer gets to its destination. The company started selling its computers in China through a network of distributors and resellers in 1995. But like all foreign computer firms, it has to compete on a tilted field. Tariffs on imported components and finished machines give a price advantage to domestic manufacturers such as Legend and Founder. Dell's Xiamen plant will lower production costs. It hopes direct sales will further reduce its price disadvantage. In addition to phone marketing, Dell is also selling through the Internet, which company vice chairman Kevin Rollins describes as "the purest form of our direct model." Including the Chinese web site, Dell has 16 home pages in five languages in Asia. It will take time for Dell's China strategy to prove itself. While the mainland boasts a respectable people-to-phone ratio of 22 to 1, its troublesome transport systems could disrupt product delivery. And relatively few companies, and fewer individuals, have access to the Internet. Still, "the People's Republic of China is a critically important market for Dell," says John Legere, Dell's president of Asia operations. "We fully expect these latest moves to ultimately result in a dramatic change in the way computer systems are sold there." Skeptics beware. Dell has made a habit of proving its critics wrong.