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Technology Stocks : Dell Technologies Inc.

DELL 122.46

-8.5%

3:59 PM EST

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To: edamo who wrote (113987)	4/2/1999 1:51:00 PM
From: Chuzzlewit	Read Replies (1) of 176387

Ed, I think the problem is larger than the sub 1K market. The sub 1K market was responsible for the eventual cannibalization of some of the retail and small business customer. So total gross profit fell, which means a lower contribution to overhead. Another part of the problem is pricing pressure. The common denominator of all of those companies is sales through channels. That creates additional cost to the consumer which means that, all other things being equal, the manufacturer ends up keeping a smaller slice of the pie. Finally, we have plain old asset efficiency that is made possible only by stringent inventory control. Not only does this free up capital, and reduce costs, it eliminates inventory risk which is precisely what companies like CPQ face in oversupply to their channel members. And they have little choice about it because retail stores must have merchandise that exceeds demand. That means that after the peak selling period (Q4) excess channel inventory must, perforce, come back to the manufacturer or he has committed the unpardonable sin of not meeting demand and losing a customer to a competitor. That's why I like Dell. TTFN, CTC

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