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Technology Stocks : Dell Technologies Inc.

DELL 126.86

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2:45 PM EST

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To: K. M. Strickler who wrote (32929)	3/7/1998 2:17:00 PM
From: Geoff Nunn	Read Replies (1) of 176387

K.M., CPQ's pc problem essentially stems from increased competition in the pc market, IMO. When you have more competition, prices are driven toward minimum costs of production. The survivor principle operates, which means that if your costs are above your rivals', you probably won't make it. CPQ right now is NOT a low cost producer. The company willingly has traded off inefficient inventory practices in return for the benefits of retail price maintenance (RPM). Yet RPM would seem to be a dubious practice in an industry in which the product can so quickly become obsolete. RPM has worked in the past because sufficient customers would continue to buy the CPQ brand even when it was overpriced. Today, when you have greater competition, I think you must ask yourself how long that practice can continue. It is inevitable that CPQ will eventually give its retailers greater authority to set prices, IMO. Regards, Geoff

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