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Technology Stocks : Dell Technologies Inc.

DELL 126.41

+2.8%

Dec 19 3:59 PM EST

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To: Paul Chiu who wrote (175512)	4/21/2006 1:58:53 PM
From: HeyRainier	Read Replies (1) of 176387

Dell's market share loss is interesting. I wonder if they just drew the line in the sand and decided it's not worth chasing lower margin products that don't meet their internal minimum ROE requirements. Their loss of market share suggests they kept their pricing a little higher to maintain margins. The question is, what projects did they decide to plow excess capital into that'll still meet their return requirements? I do think the company has lost its consumer focus though. They made it to the big leagues by listening to customers and putting those components they wanted into their boxes. Now there's a growing chorus of people who want AMD (myself included because they're just cheaper), but for some unknown reason, the company has balked at integrating those components into their 'buffet line' so to speak. A build-to-order inventory model works a lot better if you actually provide what customers want. I never thought I'd buy a Compaq/HPQ, but I did just that a few months ago when Dell couldn't beat HPQ/CPQ's offerings. And I gave them every chance to by gaming the website to give me the best cost possible. Still, no dice. They can put AMD in, offer a lower-priced computer, retain/expand their market share, and maintain their margins all at the same time if they just took this step. They need to get over their thinking that what worked in the past will continue to work in the future. And that means letting go of this Intel-only relationship. It can't hurt, and it might make Intel lower their selling prices to Dell to keep them entertained. Oh, and why not copy-cat IBM's service business? The margins in that are phenomenal.

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