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Technology Stocks : Dell Technologies Inc.

DELL 122.92

-3.9%

Dec 18 3:59 PM EST

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To: VICTORIA GATE, MD who wrote (46615)	6/7/1998 10:58:00 PM
From: Geoff Nunn	Read Replies (3) of 176387

Dr. Gate, Has there been a mistake? The first article you posted speaks to the hard times in the semiconductor business caused by overproduction of chips. Dell is not in this business, Dell is a pc manufacturer primarily. Its fortunes are not tied to the chip business. In fact it's pretty much the opposite. If chips are being over supplied, prices will fall and Dell will benefit. A reduction in chip prices lowers Dell's cost of production. What it doesn't do is affect the value consumers derive from PCs, so the demand for PCs remains unchanged. This means Dell's profit margin goes up, pc prices remain unchanged, and the difference flows directly to Dell's bottom line. In time, of course, lower costs may induce pc manufacturers to expand production, which would bring down pc prices. Meanwhile though, Dell enjoys the fruits of temporarily elevated margins. The second article you posted deals with the pending antitrust suit against Intel. I can see nothing about this suit that would affect Dell. Unless it can be shown that the suit will lead to lower prices on CPUs, in which case Dell will benefit.

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