Deleting middleman a rich idea for Dell; Computers: Michael Dell is worth $13 billion, thanks to his founding of a computer company that sells direct from the manufacturer.

THE BALTIMORE SUN

Of all of the people who have had their pocketbooks fattened by the go-go economy of the 1990s, almost no one has made out better than Michael Dell.

Dell, the founder, chairman, chief executive officer, namesake and house deity of Dell Computer Corp., is widely considered the fourth-richest person in the United States, with an overall wealth of $13 billion.

In a hypercharged age when multibillion-dollar sums litter the business pages like ticker-tape confetti, it's worth pausing a moment to reflect on the fact that one man could have $13 billion to his name.

That's not only more money than some companies make in a year, it's more than some countries pull in. Take Nicaragua, which has 4.6 million people, and a gross domestic product of $7.7 billion -- or 59 percent of Dell's total wealth. Or Chad, home of 7.4 million people who shared $3.3 billion in GDP as of 1995 -- about a quarter of Dell's holdings.

"It really hasn't affected me that much," Dell said in an interview yesterday in a small private dining room at the Hay Adams Hotel across from the White House. "I'm not an exorbitant or extravagant-type person."

Dell was in Washington as part of a tour to promote his new book, "Direct From Dell: Strategies That Revolutionized an Industry" -- the latest addition to the burgeoning genre of CEO motivational autobiography. Proceeds of the book's sales go to the Dell Foundation to benefit health care and youth programs.

How did Dell, who is 34 but could pass for 10 years younger, attain such riches? Simple -- by turning a rudimentary business idea into one of the most successful companies the American economy has seen.

When he was a teen-ager in Texas, it occurred to Dell that there was good money to be made by taking the middleman out of the transaction between a computer maker and a computer buyer. By selling directly, a manufacturer could keep prices down and inventories lean.

Dell believed in this idea enough to drop out of the University of Texas after his freshman year. He promised his folks that if the "computer stuff" didn't work, he'd go back to school to study premed.

That, suffice to say, was the last Dell saw of college. His Round Rock, Texas-based company has grown at an astonishing pace; in fiscal 1992, it had $889.8 million in net sales. In its last fiscal year, it had 20 times as much.

While Dell stock has also grown enormously during that period, the company's leader is quick to admit that much of the growth in technology stocks is fueled by uncertainty.

"When people don't know what things are worth, they guess," Dell said.

"The only things that last are companies that actually do produce earnings and revenue and profit," he added. "We're sort of an old-fashioned company in the technology sector in that we actually make profits."

While some analysts have said the personal computer market could be threatened by newer technologies for logging onto the Internet, Dell insisted that faster Internet-transmission speeds will fuel demand for PCs.

"Internet access is going to get 150 to 500 times faster," Dell said. "It will cause existing users to want to get new systems."

Dell's company made headlines last week for the announcement of a huge $16 billion parts purchase from IBM Corp.

"It gives us access to a significant piece of the technology landscape we need to continue to grow," Dell said.

Pub Date: 3/10/99

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