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Technology Stocks : AMD:News, Press Releases and Information Only!
AMD 217.53+1.5%Nov 28 9:30 AM EST
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To: Petz who wrote (5743)4/23/1998 6:10:00 PM
From: Bill Jackson  Read Replies (1) of 6843
 
John, Dell is a bit of a special case. The build to order scheme they run is backed up by a just in time very fast response time chain of manufacturers. I suspect their entire pipeline is at most one month deep(plus freight delay). IE the stuff they power up today was made a month ago max. I do not know the % of case and other stuff made locally, but that helps as it cuts the freight delay which can be 1 month from the Orient(unless you use evergreen last on first off=10 days to LA from Hong Kong.
They are like Walmart in that they are very tight with suppliers and give them daily forward projections for all parts. This way they can be on top of a downturn, and reduce parts and people so they still make only what they sell at a profit. They could probably reduce sales by 30-5-% and still make money.
Not so Gateway. 2-3 months is more like it and unless they guessed right a month or two ago the stuff is piling up as we speak in the gateway warehouses, where it dies fast.
Anyone know any facts about Gateway.
Compaq has the same problem and could well have far too many parts in stock. Same with IBM and all the others.
I think Dell will take a big stock price hit as sales fall, but I think it will stay profitable. However the stock will be humbled by the lower multiple.
Dell is an anticipation stock, cut that and it goes into free fall.
And then again my analysis might be wrong.

Bill
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