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Technology Stocks : Dell Technologies Inc.

DELL 142.68

-2.7%

3:59 PM EST

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To: jim kelley who wrote (108411)	3/8/1999 10:42:00 PM
From: Gabriel008	Read Replies (2) of 176387

Jim, the cross licensing deal between DELL and IBM will give DELL the opportunity to save the usual 1% royalty charge that it currently pays on the price of each computer it sells. I presume this includes servers and workstations as well. Unless my numbers are completely out of whack this means that DELL's gross profit may increase by approximately $23 per unit. In gross profit percentage terms this translates to approximately 26% versus the current 22%. On an EPS basis this further translates to approximately 12% versus the current 8% OR a 50% increase in EPS. Am I missing something in this calculation or can we realistically expect that DELL's EPS will jump dramatically once this agreement goes into effect?

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