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Technology Stocks : Dell Technologies Inc.

DELL 140.41

+1.1%

Dec 8 3:59 PM EST

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To: rudedog who wrote (48812)	6/23/1998 10:05:00 PM
From: Meathead	Read Replies (1) of 176387

Re: At a street price of $799, that allows a target margin of 30% and 15% for the channel. No mystery here, it makes money. Rude, In my mind, COGS and target margin "is" the mystery. I agree with your assessment of these systems from a technical standpoint. I also believe that no company enters a market segment to gain market share and break even or loose money. So it is safe to assume that in a perfect world, CPQ had profit margins in mind. However, 30% is hard to swallow. Dell's high end systems don't command a 30% margin. My guess would be margins were targeted for ~15% with ~0% or enough to cover costs for the retail channel who make money on peripheral sales (software, disks, mouse pads etc.), that's their incentive. I believe that I read in CRN months ago that CompUSA said they indeed didn't make anything on these systems. It's impossible to say what their COGS is but $450 sounds a little low... especially for a year ago when these systems were introduced. Factor in channel depreciation (they slashed the 166Mhz systems to $699 to drop the 200Mhz to $799 if I remember correctly) and your margins erode further. MEATHEAD

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