Here is an interesting article on Dell. It has convinced me to re-establish my Dell short. Basically, competitors have copied Dell's business model, competition is heating up, margins are under pressure. Dell has high P/S and P/E compared to other box makers, and really, Dell's only business advantage has been it's distribution model.
biz.yahoo.com
Dell Computer Loses its Pricing Advantage Over Industry
Leaders in Commercial Accounts
Pricing Parity with Compaq, IBM, HP, Reports Computer Reseller News
MANHASSET, NY--(BUSINESS WIRE)--Dec. 12, 1997-- The price difference between computers sold by some of the largest vendors and those sold by Dell Computer Corp. (Nasdaq: DELL - news) has all but vanished, blunting the direct vendor's momentum in commercial accounts, according to a report that will be published Monday in CMP's Computer Reseller News (CRN). The predicted turnaround came much sooner than expected, comparing Dell's direct sales to those of indirect
vendors like Compaq Computer Corp. (Nasdaq: CPQ - news), IBM Corp. (NYSE: IBM - news) and Hewlett-Packard Co. (NYSE: HWP - news). CRN attributed the three vendors' ''win at all costs'' attitude coupled with cost savings realized from channel assembly and build-to-order strategies as having pushed the timetable ahead from the anticipated mid-1998 shift.
Citing channel and vendor sources, Computer Reseller News reports that the channel and its vendor partners have outdueled Dell in recent weeks to win several major bids like Compaq's wins at General Motors Corp. [NYSE:GM - news], Procter & Gamble Co., Halliburton Co. NYSE:HAL - news] and Georgia Pacific Corp. |
