Because the analysts will not stop harping on the proposition
that Dell may be hurt by falling PC prices I want to present this
information for them to chew on:
( All the statements are from press releases found on the Dell
.com site.)
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1. 1996 Data: By October Dell had cut prices 5 times and dropped the price by 56%.
AUSTIN, Texas, Oct., 29, 1996 --
Dell cut prices last month by up to 16 percent on certain models of the Dell OptiPlex line and prices on some OptiPlex systems have dropped as much as 56 percent since January.
This is the fifth price cut announcement this year on OptiPlex PCs, placing certain Dell systems up to 34 percent less than comparable systems offered by Dell's major competitors.
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2. 1997 Data:By June 1997 Dell had cut prices three times since Jan and reduced the prices by up to 44%
Round Rock, TX, April 28, 1997 -- Dell Computer Corporation (NASDAQ: DELL) the world's leading direct marketer of computer systems, today announced that it has cut prices by up to 15 percent in the U.S. across its line of network-ready Dell OptiPlex™ corporate desktop PCs,
including systems featuring Intel® Pentium® processors with MMX® technology. This is the second price cut Dell has implemented this year for the OptiPlex line. Prices on some OptiPlex systems have dropped as much as 27 percent since January
Round Rock, Texas, June 23, 1997 -- Dell Computer Corporation (Nasdaq: DELL), the world's leading direct marketer of computer systems, today announced price reductions in the U.S. of up to 13 percent across its line of network-ready OptiPlex(R) corporate desktop PCs. Today's price
cuts are the third since January on the OptiPlex line. Prices on some OptiPlex systems have dropped as much as 44 percent since January.
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3. 1998 Data: :By December Dell had cut prices an average of once per month. (I don't know the total % cut for the year)
ROUND ROCK, Texas, Dec. 7, 1998 -- Dell Computer Corporation (Nasdaq:DELL) the world's leading direct computer systems company, today announced price reductions up to 11 percent across its OptiPlex® desktop PC line. Today's price cuts come as a result of component cost reductions and direct model efficiencies gained through growth in internet sales and online technical support delivery. These efficiencies helped Dell significantly reduce operating expenses across the OptiPlex line by 13 percent over the last year. Dell has consistently cut OptiPlex prices an average of once each month in 1998, maintaining a price leadership position among the major corporate and institutional desktop PC vendors.
Under these circumstances, my question for the analysts would be:
How did Dell manage to increase sales from $12 bil to $18 bil
and still obtain a 55% increase in earnings y/y ??
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