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

To: Gabriel008 who wrote (125137)	5/16/1999 12:26:00 PM
From: Augustus Gloop	Read Replies (1) \| Respond to of 176387

Prediction....analysts are wrong! Because of y2k computer sales, especially small business sales will go sky high in the second half of the year. Mark my post and ridicule me if I'm wrong.

To: Gabriel008 who wrote (125137)	5/16/1999 12:34:00 PM
From: Mohan Marette	Read Replies (1) \| Respond to of 176387

Gabriel: I don't get it,why would companies of any substance wait till the last minute to fix the Y2K thing as they tell me it is a time consuming long drawn out process.Many companies and government agencies is the U.S have been at it for quite some time if I am not mistaken. And oh,the small/medium businesses will most likely don't even mess with fixing the Y2K crap,they will most likely dump the old systems and buy some news ones.

To: Gabriel008 who wrote (125137)	5/16/1999 12:50:00 PM
From: jim kelley	Read Replies (5) \| Respond to of 176387

Re: Paine Weber "· One of our major concerns centers around the current pricing environment, as we are seeing increased signs of aggressive price competition. Several industry sources, including channel players, sales personnel from within the direct channel, as well as our own pricing analysis, indicate that, since mid-March, the pricing environment has deteriorated substantially in certain markets." Which markets is this guy talking about? We know that e-machines has socked it to CPQ in the low end of the consumer retail market. We know that DELL has a 999 PC for the home and small business market. "· Under current industry conditions, Dell isn't afforded the benefits inherent with a two pricing pool environment, as it enjoyed during the first half of last year. On average, the inventory differential between the direct and indirect players has contracted from 80 days in 1H98, to an estimated 30 days for 1H99." He is not including the internal inventory that companies like CPQ carry but DELL does not. CPQ's internal inventory was 38 days while their external inventory was about 30 days last time I did the calculation. Hence, the inventory differential is more like 60-68 days in favor of DELL. This is down about 20 days from last year. Thus this statement is false. The pricing advantage is still intact. "· With a tough pricing environment pushing down ASPs, pressure on gross margins could be difficult to offset on the top-line. We estimate that a 1.0% drop in gross margins would translate into a 1.5 cent/share hit to Dell's earnings. Although we believe Dell could probably absorb a 100 bp hit to margins this quarter, without taking a hit to their bottom line, we believe the company would be hard pressed to overcome a substantial (+200 bp) decrease in gross margins." No mention made of the effects of controlling OPEX or COGS or IBM royalty abatement. Pretty shallow analysis. "· More than two-thirds of Dell's revenues are derived from North America, a market which we believe is showing continued signs of weakness in PC demand. We estimate PC unit growth in the US and Latin America will increase less than 10% y/y in 1999, or half of the levels attained in 1998. We also believe that any benefits from Y2K have most likely already been realized." This analysis is screwed up given the comments by Gertener, and other PC compny leaders recently to the effect that a Y2K slowdown has failed to materialize and they do not expect it to be a significant factor. The growth figures cited to justify this position are to date false. "· The execution problems of the indirect channel could begin to put a drag on Dell's financials. And we believe industry risk will continue to increase as the year progresses, given that the easy compares enjoyed by the indirect channel will dissipate in the second half of 1999." There is little doubt that the indirect companies will continue to feel the squeeze as the year progresses because they are inherently less efficient than the direct companies. Why this translates into a problem for DELL is unstated in this report. "· Although we would avoid most of the choices in the PC hardware sector, we favor MUEI($10.88)[2], a stock that has been beaten up considerabley and represents what believe is a good value play. Our new target price is $47, or 63x our FY00 estimate of $0.75/share." This selection of MUEI gives the lie to their whole analysis. If the DELL is in trouble MUEI will be out of business. But this analyst has MUEI going up from 10 to 47 a share. Such a selection is inconsistent with their previous statements. At 63X earnings MUEI will hardly represent a value play. Regards, Jim Kelley