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Technology Stocks : Dell Technologies Inc.

DELL 133.20

+5.7%

Nov 26 3:59 PM EST

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To: GRANOLA who wrote (60122)	8/21/1998 1:51:00 PM
From: Chuzzlewit	Read Replies (1) of 176387

Granola, the reason the model can't work for Compaq is straight forward -- Compaq is unwilling to jettison resale channels. This decouples demand for computers from the manufacturer. Inventories will remain higher, and channel inventories will always be a problem. Fear of losing a lot of sales over the short term prevents Compaq from emulating Dell. LOD once likened this situation to riding a tiger. I think that description is apt. Remember, the point behind JIT is to minimize inventories, and given the rapid rate of evolution of product, this means creating as close a relationship to the purchase of components to the purchase of finished goods as possible. The existence of resellers is antithetical to this concept. Thus, it is necessary to have an integrated BTO, direct sales, JIT business model. Just part of the system won't work. TTFN, CTC

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