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Technology Stocks : Dell Technologies Inc.
DELL 111.10-7.8%Jan 20 3:59 PM EST
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To: Geoff Nunn who wrote (57596)8/11/1998 12:50:00 PM
From: Chuzzlewit  Read Replies (1) of 176387
 
Geoff, whether it makes economic sense or not, that is the way things work. But usually it does make a great deal of economic sense, and the reasoning is tied to production run rates and inventory holding costs. The rationale is that if you produce a commodity in lots of a certain size, selling in quantities of less than that size entails extra handling costs and inventory holding costs to the manufacturer. While this is particularly true of highly automated processes it also holds for labor intensive processes which have a semi-fixed cost nature.

I have no direct evidence of Compaq's cost structure, but have been assured by people who claim to know, that Compaq does have lower component prices. However, if your point is that we really don't know comparative cost structures, then your point is well taken.

TTFN,
CTC
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