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Technology Stocks : Dell Technologies Inc.

DELL 137.59

-2.3%

10:35 AM EST

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To: JRI who wrote (153145)	2/7/2000 9:21:00 PM
From: Meathead	Read Replies (4) of 176387

Hi JRI. You and Angel made a great call based on the IDC numbers. re: I do expect Dell will make that .17 silly... Referring to Q1, TM in the CC stated that the Q would be flat to Q4 as they don't see business picking up in time to rescue it. I would assume they re-iterate this fact on Thursday. TM also stated GM would drop into the teens with ASP's flat to up for the year. You can see what's happening here. A huge problem is RAMBUS. Dell has no high margin Optiplex systems because the yields on RDRAM are so low that they can't release new products. The extraordinary cost premium of RDRAM will also likely limit sales momentum on the GX300 once they start taking orders. It looks like they have only released 2 workstations and one highend Dimension where the volumes are much lower and RIMM module availability is adequate to satisfy demand. The latest register.com rumor that yields have fallen from 25% to 10% may not be completely accurate but it indicates a trend in the wrong direction. I think that a year ago, Dell fully expected this new product cycle to be fully ramped by now... which it clearly is not. This will likely create a drag on earnings for a while until either yields improve dramatically or Dell systems with new memory architectures slowly trickle out later this year and early next. This product transition indeed is not going well and Dell can thank Intel for that. With the margins on the old BX based platforms compressing fast, it will probably take a few quarters before Dell recovers. So, now that performance is suffering (hopefully it is short term), perceptions take on an increasingly important role in keeping the stock ~100B mkt cap. MEATHEAD

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