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Technology Stocks : Dell Technologies Inc. -- Ignore unavailable to you. Want to Upgrade?

To: Boplicity who wrote (144579)	10/14/1999 10:41:00 AM
From: rudedog	Read Replies (1) \| Respond to of 176387

greg - let me be clear. I believe MSD when he says he has no major worries about supply, and I don't think there is a BIG potential revenue impact - no more than say the LCD shortage last Q. But that leaves plenty of room - CPQ and the others do not have "major" problems either, and all three others (CPQ, HP and IBM) have a much smaller portion of their overall business dependent on PC components. Two years ago DELL was still small enough in comparison to the other vendors that they could count on the big guys to drive component production and then just "ride the wave". But now they ARE the wave. DELL can not satisfy a significant shortfall on the spot market - they are just too big. As the business grows, every part of the JIT supply chain grows too. As a knowledgeable guy in this field said recently, the links are so big that forging a new one or repairing a broken one affects the whole supply picture. It's the Hiesenberg uncertainty principle applied to the computer industry - DELL is so big that they change the market for the things they want to buy just by trying to place the orders. I think they ARE doing a "fixed price JIT". They will need a big regular supply of components for the consumer business, which does not fit the BTO model. If DELL meets their goals in that sector they may get to a run rate of several billion - which implies component purchases in the hundreds of millions, perhaps even a billion. What happens to the rest of the $25 BILLION or so parts they are locked into? Without knowing the details of those contracts I don't know what flexibility they have. I have confidence that they have cut deals they can live with and have a plan to use those parts without disrupting current production methods. But there can be no doubt that this is a major departure from the way DELL did business in the past.