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Technology Stocks : Dell Technologies Inc.
DELL 133.78-0.1%Nov 14 3:59 PM EST
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To: David E. Taylor who wrote (33161)3/9/1998 12:04:00 PM
From: Chuzzlewit  Read Replies (1) of 176387
 
David, you've presented an interesting analysis. While it is undoubtedly true that Compaq must reduce prices to move its inventory, it also creates a huge dilemma for them. If for example, a considerable portion is in the form of pentium pro based machines, what do they do about the newer pentium IIs? If they are pricing the old machines aggressively, what impact will this have on the market for their newer machines? Put another way, by slashing prices on the pentium pros they will be undercutting their own pentium II market.

Perhaps a better approach would be to simply replace the old pentium pro chips and mother boards with pentium II's, and surplus out the boards. Thus, they would take a one-time hit, but would avoid cascading inventory problems.

Any thoughts?

Regards,

Paul
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