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Technology Stocks : Dell Technologies Inc.

DELL 122.46

-8.5%

Nov 17 3:59 PM EST

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To: Mohan Marette who wrote (68781)	10/2/1998 7:34:00 PM
From: rudedog	Read Replies (1) of 176387

Mohan - looks like in Q3 Dell should overtake CPQ,eh? Dell's sales were real but the interpretation of the IDC share numbers is incorrect. I hope that not too many investors or analysts are paying attention to this, as it could backfire on Dell down the road if they are. IDC reports on sales by manufacturer, not sales to customers. In Dell's case, these are the same thing because of the direct model. But in CPQ's case, they were in the process of working down channel inventory by holding back shipments (and sales) to the channel. They reduced channel inventory by more than 6 weeks in a 12 week period, most of that in North America. That means that there were 2 CPQ units sold to customers for every 1 sold to the channel by CPQ. The same was true to a somewhat lesser extent of both HP and IBM. What this means is that the share numbers were all skewed by what amounts to under-reporting of the top 3 players. If you go back and adjust CPQ, IBM and HP to reflect sales to customers, then Dell's share in North America would be more like 9%. If investors have the assumption that these Dell share gains are real then they will also assume that Dell share has gone down when 3Q and 4Q numbers get reported. Let's assume that Dell's real share was 9% (which I think is the case) and they grow that to 12% in 3Q. What will get reported is a share decline from 19% to 12% when in reality there was a 3 point gain. IDC and Dataquest are open about their measuring sticks. Jim Kelley and others on this thread have done the due diligence to show that the measurements are from the manufacturer, not to the customer. So why do these analysts have such a hard time understanding it? No wonder they never make good calls.

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