Dell Technologies Inc. Message Board

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Technology Stocks : Dell Technologies Inc.

DELL 125.88

-1.6%

Dec 31 3:59 PM EST

Public Reply Prvt Reply Mark as Last Read File

Previous 10 Next 10 Previous Next

To: Chuzzlewit who wrote (37693)	4/13/1998 9:18:00 PM
From: Jim Patterson	Read Replies (1) of 176387

re: Now as to the cause of inventory problems, IMO it boils down to this: too much of the wrong stuff. This occurs when you order too much of the wrong stuff. This occurs when demand does not approximate the forecasts upon which inventory ordering is done. JIT avoids this problem because it does not rely on forecasts. Perhaps this analysis is too simple-minded and you would like to expound on the cause and severity of Compaq's problems? It is interesting that you say that JIT does not rely on forecasting. MD seems to think that Dells forecasting is one of the main factors contributing to their success. MD claims that because they are direct, they can get better feedback from their customers. This makes their forecasting better. CPQ's problem is simple. They have added capacity beyond what they can sell. What few realize is that electronic makers need to run their factories at very high utilization rates or margins fall fast. CPQ runs the plants full out. Unit growth is 18% instead of the 20% expected and then over 9 months inventory builds up. Last, Much to many peoples chagrin, CPQ's inventory problem is more in the P II area than the low end. The low-end machines are selling well in the retail area. Look at what CPQ cut prices on today. They are now giving away free monitors with PII systems, not P-MMX as they were before. Server pricing is under pressure too. I just got Dells April catalogue; I wonder how long dell can maintain ASPs by raising system configurations. Especially in the Desktop area where DELL still gets 70% of their revenues. One of my bear arguments is that for normal desktop computing, $1500 or less will buy more than enough computing when the number used to be $2000 or more. Jim

Report TOU Violation

Share This Post

Public Reply Prvt Reply Mark as Last Read File

Previous 10 Next 10 Previous Next