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Technology Stocks : Dell Technologies Inc.
DELL 120.41-1.9%11:12 AM EST
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To: Eddie Kim who wrote (39426)4/28/1998 10:22:00 PM
From: Chuzzlewit  Read Replies (3) of 176387
 
Eddie, among other misstatements, you said Compaq makes more money per employee than any other pc company including DELL

While this is true, it is very misleading. A company that is capital intensive will generate greater profits per employee than one that is labor intensive. Let's assume for the moment that the actual assembly operations have the same productivity. Just look at the difference in the sales end. Dell still sells a considerable number of machines using the telephone, and that requires human beings. Compaq, by contrast, sells through distributors and VAR's, so the volume per employee is higher.

But this analysis elicits a giant so what(!) because the flip side is that Dell has the greatest return on assets of any company I've ever seen -- bar none. This is one key reason that the market has rewarded DELL with such a high multiple. But there are other reasons as well (which also serve to differentiate Dell from Compaq). Like the most efficient handling of cash in any company I've ever seen. How about manufacturing efficiency? How about customer satisfaction? I could go on and on, but the thread is probably mightily bored with this stuff -- it's old hat to us Dell bulls.

I suggest you make a dispassionate assessment of the two companies. I think that you'll find that Dell surpasses Compaq in virtually every metric save size.

TTFN,
CTC
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