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Technology Stocks : Dell Technologies Inc.
DELL 122.55+4.4%Nov 21 9:30 AM EST
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To: Sig who wrote (170774)8/29/2002 1:54:36 AM
From: Herschel Rubin  Read Replies (1) of 176387
 
Sig,

Good points.

I'll respond to yours in UPPERCASE (not intending to "shout"):
___________________________________________

<<< -HP has a 7 week inventory overhang. And this time, HPQ WILL have to get more agressive in pricing because their survival and the credibility of their merger is at stake.>>>

Good luck to HPQ if they want to cut prices and lose more money.

TRUE, BUT THAT'S MY POINT: I NEVER SAID HPQ WON'T LOSE MONEY IN THE PROCESS OF UNWINDING INVENTORY. MY POINT IS THAT THEIR DESPERATION WILL EITHER:

1) CAUSE DELL TO JOIN THE PRICE WAR TO MAINTAIN CLAIMS OF MARKET SHARE GAINS, WHICH OF COURSE WILL CAUSE DELL'S MARGINS TO ERODE IN Q3 & Q4.

2) IF DELL REFUSES TO JOIN THE HPQ PRICE WAR, THEIR RATE OF MARKET SHARE GAIN IN THE NEXT FEW QUARTERS WILL INDEED REVERSE. AND THEY WON'T BE ABLE TO CLAIM THE MIRACULOUS TRACTION THEY'VE BEEN GETTING IN GAINING MARKET SHARE. THEN THE LOFTY DELL SHARE PRICE VALUATION PREDICATED ON FUTURE MARKET SHARE GAINS WILL BE UNSUSTAINABLE.

<< -Plus with DELL entering their coveted printer biz, HPQ will attempt to weaken DELL whereever possible
because now DELL is a direct threat to their survival.>>

Its HPQ thats having a problem surviving.

THAT'S WHAT I SAID. RE-READ MY SENTENCE ABOVE. HPQ'S NEED TO SURVIVE AND NEED TO FIGHT DELL ON MORE FRONTS WILL NOT MAKE LIFE EASY FOR DELL.

A WOUNDED BEAR CAN CAUSE LOTS OF DAMAGE.
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