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Politics : Ask Michael Burke
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To: Alohal who wrote (57501)4/27/1999 7:26:00 AM
From: Earlie  Read Replies (1) of 132070
 
Alohal:

Good post. Much heavier on logic and facts in this one.

I agree with you that the "PC slowdown" evidence can be interpreted as a consolidation within a maturing industry. I also agree that it is probable when such a consolidation occurs that a few dominant players survive and re-divide the pie into larger slices. The concern for me relates to the fact that many large players remain, which ensures the continuation of potent price wars. I also worry that until the price wars end, margins and profits will continue to implode. I don't think you would argue the point that bottom lines are under serious pressure across the industry, which has not yet been reflected in the stock prices.

Obviously I am on the opposing team with respect to Dell. I think that Dell's heavy reliance on corporate and government sales will hurt the company badly this year. The fact that the company has been slow to enter the lower quandrant of the sales spectrum is also a concern, as this is where the action is, and it syphons off sales from higher level players. Dell admitted this in the last quarterly report and vowed to cut margins to regain sales, which will thump his bottom line. I also think that Michael's massive insider sales speak to his personal view of the situation.

Time will tell.

Best, Earlie
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