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Technology Stocks : Dell Technologies Inc.

DELL 122.55

+4.4%

Nov 21 9:30 AM EST

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To: jim kelley who wrote (57359)	8/10/1998 5:58:00 PM
From: Chuzzlewit	Read Replies (2) of 176387

Jim, not to put too fine a point on it, but if Compaq cut their prices by 10%, then the reduction to profit would be 2.7MM * $1926*.1 or $520MM per quarter, all other things being equal. But your point is well taken in any event. It makes no sense for Compaq to engage in that kind of self immolation. Rudedog made a comment in an earlier post that needs correcting. He said that Compaq could manufacture computers -- particularly servers -- at a lower cost than Dell. I'm sorry, but there is no data to substantiate that claim. Compaq can undoubted purchase parts and components at lower cost, but Compaq's higher inventory carrying costs more than make up for this. On a percentage basis it seems to me that Dell's COGS is lower than Compaq's. Considering the fact that Compaq has relatively high margined server offerings seems to me to be a juicy target for Dell, given their obvious cost advantages. TTFN, CTC

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