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

To: Rafael Silva who wrote (120826)	4/27/1999 12:44:00 PM
From: wayne nikituk	Respond to of 176387

This has been posted numerous times......

To: Rafael Silva who wrote (120826)	4/27/1999 12:45:00 PM
From: Frank E W	Respond to of 176387

Thanks Rafael... I think i like this Megan! <GGG> Frank

To: Rafael Silva who wrote (120826)	5/19/1999 9:00:00 AM
From: Rafael Silva	Respond to of 176387

From Prudential Securities Equity Research: Dell Earnings Highlights Last night after the close, Dell reported Q1 results of $0.16 per share, in line with our and Street consensus expectations. Revenues increased 7% to $5.54 billion vs. our 5% - or $5.45 billion - estimate. Unit growth of 52% was slightly stronger than our 50% estimate while ASPs were slightly lower than expected. The mix of business proved to be a positive surprise with enterprise products representing a record 16% of sales. Enterprise revenues which include Dell's workstation, server, and storage product lines - increased 97%Y/Y vs. 65% Y/Y in the prior quarter. Notebook revenues increased 39%Y/Y to 21% of revenues despite flat panel constraints. Desktop revenues increased only 29% as ASP pressures offset unit growth of more than 45%. We believe desktop ASP pressures resulted from the company's changing product mix as consumer PC sales represent an increasing percentage of the mix. In addition, we believe competitive bid pricing has been aggressive throughout 1999 causing pressure on desktop ASPs. We believe enterprise ASPs increased sequentially as a result of the company's richer product mix. Growth was significantly stronger in the U.S. (+45%) and Asia (+48%) than in Europe (+29%). Revenues in the U.S. corporate market increased 39% and management noted that its win rate on new business had increased by 5% to 55%-65%. Small business and consumer momentum was also noted as strong. Gross margins declined to 21.5% from 22.4% in the prior quarter. The decline was larger than expected. We believe that after Dell's weaker-than-expected Q4 revenue performance, the company increased its price competitiveness to drive revenue growth in Q1. Gross margin pressure was offset by better opex scale. Internet sales now represent 30% of the company's sales. We believe this shift towards an increasingly greater percentage of sales online has been a primary driver in Dell's improved opex scale. And unlike in Q4 when Dell reported record operating margins and weaker-than-expected revenue growth, this quarter, Dell drove top-line momentum through increased price actions, successfully executing on the strategy laid out in the third quarter. We expect management will continue to make such trade-offs of managing to the operating margin line. Cash increased to a record $4B and working capital management improved such that the company's cash conversion cycle improved from -11 to -14 days sequentially. Inventory levels remain flat at 6 days while DSO improved by 2 days. Outlook and Investment Recommendation In response to drivers for the reminder of the year, management noted that it anticipates a relatively normal seasonal pattern. Y2K is not expected to have a material impact on demand and management similar to Hewlett Packard's (HWP, $96, not rated) comments yesterday appears increasingly comfortable that Y2K will not disrupt normal seasonal demand patterns. We believe that while Dell has and continues to downplay industry pricing pressures, such pressures do exist and will like continue. However, we maintain that the success of Dell's storage ramp and increased mix of enterprise system sales will allow the company to offset much of this pressure. In addition, we believe that as Dell migrates to an increasing mix of Internet sales, the company can further improve its opex scale. We maintain that key to the company's valuation will be Dell's continued ability to drive top- and bottom-line growth at or greater than projected levels (40% in 99). And in light of last quarter's execution stumble and corresponding revenue weakness, we believe that evidence of strong Q1 demand trends will only reaffirm investor confidence in Dell's ability to maintain its competitive advantage - reestablishing a premium to growth in line with prior levels. We believe that Dell remains the best positioned PC stock and reiterate our Strong Buy rating on the shares. Dell remains our favorite stock. Prudential Securities Incorporated (or one of its affiliates) or its officers, directors, analysts, or employees may have positions in securities or commodities referred to herein and may, as principal or agent, buy and sell such securities or commodities. Prudential Securities Incorporated makes a primary over-the-counter market in the shares of Dell.