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Technology Stocks : Dell Technologies Inc.
DELL 126.59+0.1%Dec 22 3:59 PM EST
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To: Jorge who wrote (34447)3/15/1998 10:23:00 PM
From: Chuzzlewit  Read Replies (1) of 176387
 
George, I'm not a bear, but I believe that there are two possible bear arguments.

1. The price of the stock is too high, and it has become a momentum players vehicle; and

2. The demand for computers is not growing as fast as it had been for the past couple of years.

It is pointless to argue valuation because we don't know how to objectively value stocks.

The second point is true, but we are not talking about a decrease in demand. We are talking about a decrease in the increase!

And what effect will it have on Dell? Perhaps it creates the opportunity for Dell to increase its market share at the expense of companies like Dell and IBM, without eroding Dell's profit margins. After all, what will CPQ and IBM do with their aging and expensive inventory? If they try to sell it before building new machines they will be trying to sell already obsolete machines at the expense of the newer, faster models. That will place these two companies in the second-tier, and Dell increase its market share in the corporate space. And if they sell the bloated inventory at the same time they are selling newer machines it will take longer for them to clear the old inventory and in order to make the pricing attractive they will end up cannibalizing their own sales.

Regards,

Paul
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