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Technology Stocks : Dell Technologies Inc.

DELL 123.98

-3.0%

Jan 5 3:59 PM EST

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To: Sig who wrote (167376)	10/5/2001 9:15:31 AM
From: GVTucker	Read Replies (1) of 176387

Sig, RE: For example its normally stated that Dell cuts prices only to take share- implying earnings will suffer. That's because earnings do suffer. Operating margins were 11.2% in fiscal 1999. They dropped to 9.7% in 2000. In fiscal 2001 they declined further to 8.7%. Now they're closer to 7%. For Q2 fiscal 2002 operating margins were 7.2%. No question that Dell can cut prices much more than its competitors, which has pushed many other companies to negative margins. But it would be folly to assume that the price cuts haven't also hurt Dell in the process. Margins in this business will declining for some time, and it's best to build that into any models for future earnings.

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