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Technology Stocks : Dell Technologies Inc.
DELL 120.60+1.8%Jan 9 9:30 AM EST
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To: jim kelley who wrote (42073)5/14/1998 2:05:00 PM
From: Jim Patterson  Read Replies (2) of 176387
 
re:>>> If DELL's sales went to 0 tomorrow, it looks like they would be sitting
on an incredible 7 days worth of inventory bloat

Jim,

Do you really believe that 100% of DELL's orders are on an ordered PC basis?

Wouldn't a company get better pricing if they guaranteed they would take delivery of X number of units with a flexible margin of 10-20% of X?
I know if I were a disk drive supplier, I would give better prices if I know that customer was going to take delivery of at least X number of drives.
Other wise I am going to charge a slightly higher price because of my own inventory risk.
But then again, We know that CPQ gets better pricing on parts than DELL does anyway.

So if their sales went to 0 today, they would have 7 days worth, But in 7 days, they would probably have 11-13 days worth of inventory due to contractual supply agreements.

Of course, I don't know exactly how these supply agreements are arranged. Maybe DELL has no part acceptance guarantee on any parts.

If this were the case and they were dealing with me, I would give others a better price just to get DELL to agree to accept minimum orders.

But you may be right. DELL is afraid of nothing. Therefore they should be immune to all the problems everyone else in the industry seems to be feeling.

Are they?

Jim
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