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Technology Stocks : Dell Technologies Inc.

DELL 133.78

-0.1%

Nov 14 9:30 AM EST

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To: edamo who wrote (162961)	11/30/2000 6:12:32 PM
From: rudedog	Read Replies (3) of 176387

ed - I agree. DELL was obviously taking pricing action far beyond component savings last quarter, and it showed up big time in their server sales, where they made mediocre revenue gains despite strong unit gains. They have dropped prices in every category since then, and added substantially to the "freebie" list. The idea that this is correlated to component cost reductions is pure BS and even a simplistic analysis can show that these cuts will go directly to the bottom line. It is also significant to me that the other major OEMs have not followed DELL's pricing moves. CPQ in particular has made only the usual seasonal adjustments in price - they routinely discount consumer products ahead of the Christmas season. Server prices have hardly changed at all. IBM has made some selected moves but nothing across the board. This tells me that all is not well in DELL land, and that DELL is still intending to drive unit growth at the expense of profitability - the opposite of CPQ's stated policy. DELL has more margin to give away, but the recent price moves are way bigger than the 7 points or so that DELL maintains in margin edge. Still, what can I do but sit on my shares and watch the clock tick on my Feb options? Fortunately I held back on much of my impulse purchasing of the "buying opportunities" over the last few weeks and am still sitting on some cash. As far as what MSD is saying, I don't believe a word of it - not because I think MSD is dishonest, but because I think he is unable to accept the reality of where DELL is today and thinks that the current conditions are temporary and so enthusiasm and optimism will carry investor sentiment until the business turns around. If they carry the current pricing structure through the quarter and the others don't follow suit, I will expect a weak statement next quarter from DELL.

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