dan niles $50 target: DELL reported 4Q earnings today of 15c/share, inline with expectations; 50% of revenues came from DELL.com.|
Dan Niles mentioned that he had downgraded the stock in 10/99 just before the first earnings warning, then upgraded on the pre-warning announcement.
DELL basically re-set its expectations to where they needed to be.
Revenue is important thing to note; they came in at $6.8 billion, above the $6.7 billion expected. Conference call will be later, but the press release gives a bit of a preview. Some of the positives include:
- DELL now accounts for 40% of the growth in the server market; grew its market share here from 2% in 1995 to 25% for the recently completed quarter; Windows 2000 should spur them even higher
- beyond the box revenues are growing at rates over 40%/year
- relationship with AOL was announced today where DELL will pre-install AOL software on some of its boxes
Niles commented that it is important to note that DELL provides more servers to dotcom companies than even SUNW.
Investment gains are above Wall Street expectations and growing revenues by over 30%. Profits were squeezed because (1) INTC could not supply enough products to DELL and (2) big corporations did not want to buy pc's at the end of the year, with y2k concerns. Both these issues are in the past and margins are starting to look better.
Niles says that DELL will be at $50 by latter part of this year and it is time to buy the stock.
As to the spate of attacks on web sites, Niles believes that in general it is a concern. People have to feel secure if they are going to do transactions over the net. However, security is getting better and it should improve going forward. In any event, it is not a new problem, just more prominent.