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Technology Stocks : Dell Technologies Inc.

DELL 133.20

+5.7%

Nov 26 3:59 PM EST

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To: stockman_scott who wrote (121891)	5/3/1999 7:05:00 PM
From: rudedog	Read Replies (2) of 176387

Chuz, Scott - I think you have misunderstood the plan CPQ was trying to put in place, the problem they are trying to solve, and the value of the components they have put together, and likewise are underestimating the work that DELL will have to do to make its own transition from minor player to industry leader. CPQ has chosen a path which makes the growth of their PC business less of a factor in the overall corporate revenue picture. As the market leader, this is probably an appropriate strategy. Their new businesses (high end computers, services) are not channel dependent, which makes the inevitable rough water with the channel more manageable as they transition their business model. DELL is not in a position to take high end storage sales from CPQ - they will be doing well to develop any significant business in that sector. They have several key hurdles to overcome to even get into the game. Unless they can develop their virtual model in this space, they will be relegated to the low end of the storage market. Likewise their enterprise server business will be capped without a successful virtual model. These are not easy things to do and DELL's current management expertise does not assure success. I believe DELL will pull it off but expect a couple of mis-steps along the way. To say that investors should switch from CPQ to DELL at this point is to claim that DELL will more than double in the next year. CPQ will certainly get back into the mid-40's within a year. I am not certain that DELL's prospects would include doubling in the next year - 30% may be a more realistic expectation. I would not say that CPQ's top talent went to DELL - more like solid mid-range players who were not seeing their best potential at CPQ. I have not seen the departure of any great talent at CPQ - maybe you can refresh my memory but I can't remember anyone departing who seemed like they were a significant contributor.

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