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Technology Stocks : Dell Technologies Inc.

DELL 119.41

-2.7%

3:59 PM EST

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To: DoggieDude who wrote (56818)	8/7/1998 2:05:00 AM
From: Chuzzlewit	Read Replies (1) of 176387

DoggieDude, here's the cat's perspective on your point I'm happy as a consumer to see Dell pass along saving to the customer, but as a share holder I think I'd rather see them boost the margins. This is a commonly held mistake by people not versed in economics. Margins don't count. Profit counts. So, increasing the price may result in a large drop in sales such that total profits decline, and decreasing the price may result in a large increase in sales such that profits increase. That's the crux of the argument against watching ASPs as a bell weather for profits. Even monopolists don't raise prices in a vacuum, because it too, like any other business, is a profit maximizer. When Dell lowers prices, it is either because they are forced to as price takers, or they choose to because of the elasticity of demand. The evidence indicates that Dell chooses to lower prices to increase profits. So forget about metrics such as ASP and gross margins -- they are red herrings. Keep your eyes on profit and operating cash flow. TTFN, CTC

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