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Technology Stocks : Dell Technologies Inc.

DELL 127.61

+0.8%

Dec 23 3:59 PM EST

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To: XoFruitCake who wrote (33614)	3/10/1998 3:28:00 PM
From: Mohan Marette	Read Replies (3) of 176387

Lehman Brothers Research- By Kimberly Alexy CFA [ref:Dell et al] Highlights from the report and I paraphrase. Purpose of this research note-To discuss the impact of Compaq's pre-announcement on other industry players in the PC Hardware industry. 1.Lehman Bro believes 'end demand trends' even in the US corporate market remain very healthy. Inventory transition and channel re-engineering will likely impact near-term growth outlook for indirect PC vendors...meaning IT will not affect DELL. 2.Pricing-Indirect vendors will suffer from diminishing profit due to aggressive price-cuts to clear the inventory, meaning would not affect DELL. 3.DELL will continue to ship leading edge products at competitive prices while indirect PC vendors struggle to clear the channels stuffed with older products. 4.Demand-No softness in sight 5.DELL has aggressively capitalized on the current market environment driving prices down and creating more difficulty for indirect vendors to compete. 6.Lehman Bro. believes DELL remains best positioned to thrive in this increasingly competitive environment. 7.Lehman Bro. is of the opinion that DELL has already been pricing aggressively while maintaining margins by leveraging the benefit of rapidly falling component costs. They also believe the advantage of the direct model will cushion margins in a more aggressive pricing environment. 8.Lehman Bro.thinks DELL would need to respond to some of CPQ's pricing cuts, but as approx.40% of DELL's revenues are derived from medium and large US corps. DELL would largely be insulated from the majority of the pricing pressure. 9.DELL ships a larger mix of desktop product than its indirect peers as for example in Jan quarter DELL shipped 90% of its corporate desktop line with P2 CPUs vs 22% for the industry.This means price cuts for older models by indirect peers won't affect DELL. 10.Lehman Bro. thinks DELL will dominate the market *with leading edge,technology-rich products* sold at competitive prices. 11.L.Bro. is of the opinion that DELL's revenue in other geographic areas are accelerating and noted in their recent trip to Malaysia they visited DELL Pengang operation and discovered several reasons why DELL is gaining strong share and posting strong growth in this environment while others have noted continued weakness. ------------------------------------------------------------------- So gang that is just about the size of it,draw your own conclusions but I say DELL will be in the upper $80s by May 98.

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