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

To: Boplicity who wrote (127152)	5/20/1999 12:38:00 AM
From: PAL	Read Replies (3) \| Respond to of 176387

From Individual Investor May 20, 1999, an article by Analyst: Will Frankenhoff Updated on 5/19/99 with Dell at $39.50 Recommended 11/16/98 at $31.60 On Tuesday, Dell posted results that have caused many investors to question the company's near-term outlook. We don't share that concern. While we acknowledge that the shares might come under pressure in the near term due to concerns about Dell's lofty valuation (55 times 1999 estimates), we believe that Dell remains the best play among PC makers and that its continued market share gains will pay off further down the road. At current levels, shares are selling at a 22% premium to its earning growth of 45%, which is not unusual for an industry dominator. Microsoft (Nasdaq: MSFT - Quotes, News, Boards), for example trades at a 47% premium to its earnings growth rate. Coca-Cola (NYSE:KO - Quotes, News, Boards) is expected to boost profits 15% annually over the next five years, but its shares trade for nearly 40 times 2000 earnings estimates. Dell posted sales of $5.5 billion for the first fiscal quarter ended April 30, 1999, an increase of 41% over the prior year's period driven by a 54% increase in sales to consumers and small business customers and a 48% gain in the Asia-Pacific region. Earnings of $0.16 per diluted share were inline with estimates and represented a 45% increase over last year's quarter as a slight decline in gross margins (down 80 basis points to 21.5%) was not enough to offset the solid growth in revenue. This margin decline was expected as Dell aggressively slashed pricing to increase its market share. According to IDC estimates, Dell captured 10% of the worldwide PC market place, up from 7.8% in last year's quarter while increasing its share of the U.S. market to 14.8%, up from 11.8% in Q1 1998. Like this Article? Equally impressive was Dell's growth from its enterprise systems- made up of servers, workstations and storage products- which jumped 97% on a quarter/quarter comparison to $885.9 million, or 16% of sales. Dell's Poweredge servers were shipped at rates three times the industry average which translated into a 3 percentage point gain in market share. Dell was ranked third in worldwide server market share during the period and number two in the U.S. We view this as a plus as servers tend to be higher margin products than PCs. We also like the fact that Dell continues to perfect its direct business model, a fact highlighted by the $18 million/day in sales over the Internet which contributed 30% of total revenue in the quarter. As Dell heads towards its stated goal of deriving 50% of total revenue from Internet sales, the company should be able to leverage its SG&A expense. This trend is evidenced by the fact that SG&A as a percentage of sales fell to 9.2%, down from 9.9% in the year-ago period and 9.5% in Q4 1998. Further upside could come as the company continues its expansion into using the Internet for customer support, procurement and relationship management. As always, Dell's balance sheet is the envy of the industry. The company ended the quarter with $4 billion in cash & equivalents, up from $3.2 billion in Q4 as the company generated more than $1 billion in operating cash. Days in inventory (DOI) remained sequentially flat at 6 days and DSOs were similarly flat at 35 days. It should also be noted that Dell repurchased approximately 18 million shares of its stock during the quarter. We understand why investors have knocked Dell down after the announcement since Dell has a history of beating estimates and growing both bottom and top line growth at greater than 50%. Well, those days look to be over, at least on a consistent basis, but the company is still capable of growth in the 40%-45% range and that's fine by us. As the company continues to gain market share, leverages its industry leading Internet business, and grows enterprise systems revenue as a percentage of total sales, we believe that Dell will continue to prosper. We maintain our buy recommendation.

To: Boplicity who wrote (127152)	5/20/1999 2:51:00 AM
From: stockman_scott	Read Replies (1) \| Respond to of 176387

Here's a Post I picked up on a Yahoo thread...It should spark a little healthy discussion ...I personally do NOT agree that AOL is in trouble -- in the near term. They have a very powerful global network and have a lot of leverage with advertisers and online retailers. Yet, the author of this post brings up some interesting points... Best Regards, Scott -------------------------------------------------------------------------------------------------------- <<Imagine a consortium where everyone has their place in it. Imagine AOL, Netscape, Oracle, Sun, not in this consortium. What will happen to them going forward ? AOL is about to get squished like a grape by AT&T and Microsoft if the government doesn't do something about it and FAST. Tell me, what does AOL really have except except a bunch of neophytes that didn't know any better than to get connected to the internet via just about the worst ISP on the planet ? As their primitive analog modem banks become more and more irrelevant in the face of cable and dsl connectivity, as their portal becomes more and more eclipsed by superior free places Yahoo, what are they going to do ? The high bandwidth providers aren't stupid. They are requiring users to log in through portals THEY CONTROL. Yahoo is in trouble too. If you don't own relevant hardware, real infrastructure that can't be done without, then you're in danger of becoming irrelevant. This is why I keep telling you to imagine the power of Dell when it is supplying 25% of the PCs in the world. Owning the hardware is where the power lies for when you control that, you can prejudicially control where it calls "home", at least initially, and often (effectively) permanently. AOL doesn't own any data pipes, nor does it own any PC hardware. What's it going to do when Dell, AT&T, and Microsoft all agree to steer new PC owners towards their respective profit pools ? AOL better start cutting some deals or its dead, and I really don't see what it has to bring to the bargaining table that isn't quickly becoming irrelevant. >>