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Technology Stocks : Dell Technologies Inc.
DELL 133.78-0.1%Nov 14 9:30 AM EST
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To: Jon Stept who wrote (98583)2/13/1999 2:27:00 PM
From: Buster O. Hype  Read Replies (2) of 176387
 
The important thing for all Dellheads to consider is that Dell in the past primarily benefited from good year to year comparison because of a relatively smaller revenue base that its competitors. Unit sales of 17% will not justify Dell's valuation. Dell has to continue to gain market share at the expense of IBM, HP, CPQ, Gateway, and the Unix server companies. They were able to do this for the past 3 years. Question now is, is the competition still sleeping. IBM, in its most recent quarter just showed that it will sacrifice profitability in order to keep market share. Dell is competing with companies that have their stocks in the 2-3 X sales ratio. These companies can really sacrifice their margins with minimal impact on their stock prices. Question is can Dell engage in a price war?

Just imagine if Dell's competitors drop their prices by 20% across the board. They will severely undercut Dell's prices. All I know is everytime I look at PC and server prices, they've been going down drastically. WIll the increase in unit sales be enough to offset the decrease in average selling prices. It is becoming very obvious that Dell will be a victim of its own success.

The good thing about it is Dell has a cult following which will provide enough support for the stock. After this quarter, I expect Dell to be a very good trading stock on the downside and a good hedge against other tech holdings.
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