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Technology Stocks : Dell Technologies Inc.

DELL 127.92

+0.4%

Dec 30 3:59 PM EST

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To: ed who wrote (37720)	4/14/1998 11:45:00 AM
From: Chuzzlewit	Read Replies (2) of 176387

Good morning Eddie. Before you dismiss my remarks as wrong, let's analyze th implications of your estimates. We have three profit centers with which to deal, and the easiest way to analyze the numbers is to start at the retail end. 1. Retail Assumptions: the computer retails for $700, and the gross profit margin is 20%. Conclusion: the retailer paid $560 (landed cost for the unit). Handling costs (including shipping and stocking costs, etc. $15). Therefore the price to the retailer fob the wholesaler/distributor is $545. 2. Distributor Assumptions: Profit margin is 15%. Shipping charges $10. So the cost to the distributor is $463.25. Less the $10 shipping cost we have $453.25. 3. Manufacturer Assumptions: Eddie's numbers (i.e. cost to build = $500). Profit margin -9.35%. In fact, Eddie, to come up with your kinds of assumed gross profit margins (25%), the unit would have to be put together for $340, and this number would need to include factory overheads. So before you glibly comment that I'm wrong check the implications of your own assumptions. TTFN, CTC

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