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Technology Stocks : Dell Technologies Inc.

DELL 128.43

+0.6%

Dec 24 12:59 PM EST

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To: jim kelley who wrote (38348)	4/19/1998 7:12:00 PM
From: Chuzzlewit	Read Replies (2) of 176387

Jim, you said Incidently their reported gross margins gapped down to 18% from the 27% in the previous quarter. Could this be due to the impact of the Sub-zero? I've been asking myself the same question also, and I believe that there are two separate problems here. The first is that there are inventory problems associated with the higher end machines -- servers and power desktops from what I've gleaned in the press. Inevitably, inventory buybacks and obsolescence brings down margins, along with such promotions as free 14" monitors. But the second issue is whether the sub-zero is profitable. I, for one, have come to the conclusion that it is not a very profitable line (I guess gross margins of under 10%). My guess is that Compaq has been waffling on making the really difficult decision to jettison the channels for the higher end machines. They probably view it as painting themselves in a corner, because once comitted there is no going back. TTFN, CTC

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