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Technology Stocks : Dell Technologies Inc.
DELL 149.13-2.1%Nov 6 3:59 PM EST
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To: jim kelley who wrote (40821)5/7/1998 3:08:00 PM
From: Gabriel008  Read Replies (2) of 176387
 
Jim, A long time ago when I worked as a brand & marketing manager in the consumer products industry we had various marketing budgets set up for promotional allowances to the retail trade. These budgets were designed to reward higher volume purchases, provide price protection, conduct co-operative advertising with the chains, generate certain required price points at retail, etc.
These budgets were very discretionary and certain key customers were generally allocated more than their fair share. Senior management never asked too many questions re the promotional funds usage - they only wanted results.

This age-old practise seems to be very evident in the pc retail channel. CPQ, HP, IBM have set up special funds to compete with DELL on a by-account basis and probably have other discretionary budgets set up for other retail oriented purposes.

Although these special funds allow DELL's competitors to compete in a more flexible manner in the final analysis it won't really matter since we measure success on a bottom line basis anyway.

It appears given Compaq's increase in March channel inventory they will attempt to improve their numbers by filling up the pipeline [again] and that will only mortgage next quarter's business. It's hard to believe an organization such as Compaq would resort to this kind of retail business strategy. The implication is obvious and IMO, at this juncture, it's akin to re-arranging the deck chairs on the Titanic.
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