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Technology Stocks : Dell Technologies Inc.

DELL 133.74

-0.1%

3:59 PM EST

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To: edamo who wrote (163041)	12/3/2000 11:25:21 AM
From: rudedog	Read Replies (2) of 176387

ed - here's a post from the zoo quoting some analyst - I don't know who the analyst was but this looks to me like a very good read of what's going on. Technology differentiation by: mariobon2000 12/2/00 12:20 am Msg: 378389 of 378592 We continue to view Dell's recent revenue disappointments as primarily company-specific. We've been somewhat contrarian as we've believed the state of overall PC demand hasn't been behind Dell's revenue problems, nor has the law of large numbers been an intractable problem for Dell given its single-digit market share around most of the world. In our view Dell's company-specific issues include the following: 1) Ongoing failure to execute to plan in Europe, a problem that increasingly looks tied to a lack of exportability of Dell's highly-efficient model rather than more-easily-resolvable management quality issues. 2) Less-than-expected progress in the high-end server portion of Dell's enterprise segment, where technology differentiation is a more important issue than in traditional desktops and low-end servers. 3) Lack of appreciation for the business model improvements by competitors, especially Compaq. There is simply less advantage to Dell's direct model now that Compaq and others have rationalized their distribution and manufacturing models. With hope, Compaq's results two weeks ago helped prove the point we've been making for several months now. More detail on the recent channel buy-ins. It's not widely known that Dell has for years moved substantial product volumes through corporate resellers at the request of many of its major accounts. For the first time we're aware of, Dell was executing buy-ins at quarter-end with some of the big U.S. corporate resellers/integrators. At this point we can't quantify the amount but obviously don't view it as a positive sign. We believe Dell's buy-in offers have included material margin discounts and some degree of returns privileges for resellers taking on extra inventory. HP (HWP, Buy, $46), as we've noted before, was also seeking buy-ins of PCs and printers in multiple channels in late October. We've found no evidence of stuffing by Compaq or IBM. Lest we create too much concern, the collective size of the buy-ins offered recently is small compared to the multiple months of inventory we saw moved from CPQ and IBM to the channel in the heyday of channel stuffing in the mid-90's. We therefore wouldn't worry about a material change to price competition due to excess channel inventory getting worked down there just isn't that much extra product out there. The effect of the recent buy-ins is simply to make us more skeptical about the FY 3Q revenue numbers about to be reported by Dell and HP. messages.yahoo.com

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