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Technology Stocks : Dell Technologies Inc.

DELL 123.39

+5.1%

3:18 PM EST

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To: Jim Patterson who wrote (26462)	12/29/1997 11:56:00 PM
From: Meathead	Read Replies (2) of 176387

A few more points to consider.. Dell is adding compacity. Dell spends a great deal of management recources to increase and add capicity. It is easy when all new capicity is utilized. and at 100% in DELL's case. If there is a slackening of demand in a region, that 100% utilization will dip. That is when the model breaks down. Suddenly the new capacity is a liabality Dell is nowhere near 100% capacity at any of it's factories. The Penang Malaysia plant supplies the AsiaPac region and it too has lot's of excess capacity... it has since it opened its doors. This excess capacity is not and has not been a liability therefore it won't cause the model to breakdown. OK. you failed to mention that a 7% sales decrease would hit EPS by 20% The assumption being 3188 * 7.7% = 245M, 245M / 360Mshrs = .68 2965 * 7% = 208M, 208M/360Mshrs = .58 14.7% - ok, close enough... don't bet on a sequential decline in revenues however. The AP os 7% of sales. Great. Now does that mean that 7% of Revs comes from that region or from the Companies in that Region. The region only... what's shipped out of the Penang facility. Semi Manufacture Eq companies. Spending is expected to be down 20% in the region for the next 2 years. Are any PC's involved with those Cap EX Dollars ? PC companies and Semi equip makers fortunes are not really related. However, 1995 taught us that as chip companies were putting a hold on new fabs, they were also pushing out equip orders. The reason being excess dram capacity. That industrywide (therfore competetive forces) glut resulted in collapsing memory prices.. a bonanza for the boxmakers. Asia is scaling back for other reasons obviously. This wont last long as they can ill afford to fall too far behind... that would be another and possibley larger long term disaster for them. If you study Dell's business model, you'll find that amazingly, everything else can go to crap and Dell benefits from it. It's pretty brilliat really. Their mfg sites are cheap and efficient so MODS that arent producing product don't hurt them. The thing to worry about is a massive world-wide technology slowdown (i.e. nobody's buying computers). I'll let everyone know when that happens<ggg>. MEATHEAD

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