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Pastimes : Ask Mohan about the Market

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To: Joseph G. who wrote (9256)	11/24/1997 4:50:00 PM
From: Cynic 2005	Read Replies (2) of 18056

Joe and all, I took a look at DELL's earnings. Something is fishy: Mr. Clean, Michael Dell says that their average unit selling price is "stable." Revenues up by 58% and net is up 72%. Commendable! But, the kind of cynic I am, I see some disconnects: 0. Mr. Dell claims ASP is "stable." 1. Last Q gorss-margins @ 22.2 Current Q gross margins @ 22.5% 2. From last Q, Intel cut CPU prices, diskdrive and memory prices plummetd. We know 2 is correct. If #0 is correct, #1 can't be right! Gross margins have to be much higher. And the earnings have to be much higher. Unless, they did the customers an unasked favor by giving away stuff. If they did give-away stuff (higher performance machines for the same ASP), it won't be long before DELL catches the same virus MUEI and GTW caught! i.e. their average selling price has to and will decline in the next quarter. So will their gross margins. I hope the herd runs-up the stock. I think it is finally time for shorting DELL. -Mohan

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