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Technology Stocks : Dell Technologies Inc.
DELL 126.25-0.8%1:22 PM EST
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To: Chuzzlewit who wrote (103157)2/19/1999 6:49:00 PM
From: yard_man  Read Replies (1) of 176387
 
two points 1) DELL lost market share
2) sales to the channel might not be all they appear to be

>>Why would Michael Dell admit that he had been too slow going after the
lower priced markets, if he didn't think that is where future growth was going
to be? I don't recall an "admission". I could be wrong, but my sense was a
reassessment. The issue is not growth in units, but growth in profits. It makes little
sense to enter a market place with little or no profit.<<

There was an admission. I will find it and post it. In fact he admitted that DELL had sacrificed sales for margins. That obviously can't work for very long, but that's not even the important point.

Consider what is happening to the ASPs industry wide and what DELL's ASPs are now. DELL is in an enviable position of having had higher than average ASPs for some time. Now as the unit sales and ultimately dollar sales shift more and more to the low end -- where is more and more of DELL's profit going to have to come from? But as you said it is a lower margin business?

Bottom line DELL has to follow growth -- even if it is into lower margin business ... that is why DELL is overvalued going forward. ASP's are going to fall -- getting compressed for all the players, unless DELL reinvents itself into something else ...

Your point about DELL not being agressive enough on price -- I agree wholeheartedly -- they could have sold more boxes, if they had targeted consumers, but margins would have suffered.
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