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Technology Stocks : Dell Technologies Inc.
DELL 129.94-6.2%3:59 PM EST
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To: stockman_scott who wrote (143525)10/1/1999 1:26:00 PM
From: jim kelley  Read Replies (1) of 176387
 
Re:Niles on CNBC

The thrust of Niles argument seems to be that the earthquake in Japan has interrupted supplies of some PC
components and that DELL because of its JIT inventory would be forced to compete for the affected components in the spot market. He said too bad and in 3 to 6 months things will stabilize. He is expecting DELL's margins to get squeezed between higher component costs and lower ASP.

DELL should be reporting on this matter next week if indeed what Niles says is true.

Why this would affect DELL more than GTW, MUEI and others is
not completely clear. However, the argument seems to be that
DELLS business is 70% corporate and those contracts are fixed price contracts so that if DELL has to pay higher prices for components it will not be able to pass along the
cost increases. The other direct companies can pass along price increases because their business is more SOHO and consumer proportionately.

Niles did not seem to be perfectly confident but says he has good visibility into the supply chain and almost every component is affected. He is not able to figure exactly what the component substitutions DELL may be able to find and he does not know he exact constitution of DELL's corporate and government contracts.

To clear these Taiwan supply issues up, DELL needs to clarify the situation for its stockholders.
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