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

To: Boplicity who wrote (127851)	5/22/1999 9:27:00 PM
From: Meathead	Respond to of 176387

I hear you Greg. Since Palm Pilot issue is a little cloudy, let's apply a little analysis to get a sense of quarterly volumes and revenue. Because 3Com owns the Pilot, their latest 10Q would be a good place to start. In 3COM's latest quarter, they posted revenue of 1.4 Billion. 50% of revenue is generated from Client Access devices: Client Access. Sales of client access products (e.g., desktop network interface cards (NICs), desktop modems, mobile personal computer (PC) cards and a pro-rata allocation of handheld computer products) ...in the third quarter of fiscal 1999 represented 50 percent of total sales, compared to 52 percent in the second quarter of fiscal 1999 and 56 percent in the third quarter of fiscal 1998. Since this is all we can glean, well make some assumptions from here. We know the price range of the Palm Pilot so we'll assume an ASP of $250. Now we must guess at what percentage of Client Access device revenue is generated from handhelds. Let's say one third. One third of 50% is about 16.5% of total revenue. Now we have ballpark figures. Quarterly revenue generated from Palm Pilots ~230M. Quarterly unit volumes ~900k. COMS net margin is in the neighborhood of 7% so we can say they earned about 16M from Handhelds. The Palm Pilot is the best selling Handheld on the market today and these are the kind of revenues and profits generated. NOT TOO GOOD. You are correct, the volume is quite impressive, but the business generates anemic revenues and profits at this time. Competition and Risks with affirmation that the Handheld market is growing rapidly: competitors in the low-end handheld computer market, such as Olivetti, Compaq, and Hewlett-Packard introduced new products with aggressive prices...... The Company has announced its focus on the following high growth and/or emerging markets: Handheld Computing - IP and LAN Telephony (VoIP and LAN Telephony) - Broadband Access (primarily cable and DSL) – Wireless Access - Home Networking ... Now the boilerplate disclaimer: The transition of the Company's focus to these high growth and emerging markets may cause disruption in the Company's research and development efforts, sales, profits, distribution channels, organization and market position. There can be no assurance that these emerging markets will materialize in the timeframes expected by the Company, that the Company will introduce products for these markets in a timely manner or that the market will accept these products, or that the Company will successfully generate significant revenues from these markets. Let these guys use their money to figure it out and push it to critical mass. This is one of many strategies that separates Dell from the rest of the pack. MEATHEAD