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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: Meathead who wrote (25876)	12/29/1997 11:52:00 AM
From: Jim Patterson	Read Replies (2) of 176387

RE: You can't predict what it would take to maintain gross margins based on revenue and unit growth only, you need revenue and COGS. COGS is mainly a function of material and component prices. GM = (Rev-COGS)/Rev. Increasing revenue (units x ASP) does'nt tell you much about net margins either unless you know COGS. Sorry it has taken so long to respond, Hollidays you know. Dell computer, Michael Dell's famous last words will be "It is only 6% of sales." Well Dell works on about 7 % net +/- .5 Subtract 3% for the 50% drop in the Wan and the Ti Bot Ect... and 7 % turns to 4 %. That is a 40% drop in NET. Now you can use all of your fromulas and COGS and OPEX and GM and Ratio analysis and everything else. But also remember that the corolations between these things is not linear by any measure. Also when the Rev hit comes as fast as this one is going to, there is little time for management to adjust the opperating model. Jim

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