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Technology Stocks : Dell Technologies Inc.
DELL 146.68-1.7%Nov 7 9:30 AM EST
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To: Mani1 who wrote (152880)2/3/2000 12:52:00 PM
From: Chuzzlewit  Read Replies (2) of 176387
 
Mani,

Dell's model is no longer superior.

Surely you jest! Other box makers are trying to emulate Dell's model (with little success). The key to Dells' success continues to be its exceptional asset turnover ratio because maintaining inventories is the kiss of death for two reasons.

First, inventory obsolescence is very costly, and while it may have buffered Dell for some components, it would have created inventory write-downs for obsolete CPUs;

Second, high turnover implies relatively small capital requirements for expansion. That's why Dell has been a cash cow at the same time it has grown unit sales 40% - 55% p.a. in the past.

The supply chain problems will disappear as component manufacturers ramp up production to match demand.

IMO, the real question is not the superiority of Dell's model (that's a given), but how it can migrate that superior model into non-box growth areas.

TTFN,
CTC
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