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

To: rudedog who wrote (145258)	10/19/1999 10:51:00 PM
From: D.J.Smyth	Read Replies (2) \| Respond to of 176387

rude, your comment, "As far as the argument that "everyone will have the same problem", that doesn't play either. IBM, of course, has their own price protection plan, called technology infrastructure. HP and CPQ did equity investments in several DRAM manufacturers years ago, and have product agreements tied to production costs, not market price, so they should have a much better picture than DELL apparently has. DELL's recent agreement with Samsung covers LCD panels, not DRAM. And even the LCD deal will take a long time to bear fruit." (a) obviously having product agreements tied to production costs is no surety for future delivery on price; since as production costs rise, your cost rises with it. With Dell, who began making serious DRAM product agreements over the past four to five years, some of which were maturing untimely before and after the quake (of which many were in the process of renegotiation), it's clear it is more dependent on contractual supply costs than production costs in general. So, Dell won the first round as contractual agreements were shortened when DRAM prices began to fall below production costs, and lengthened as prices began to rise. But as prices began to rise DRAM suppliers were unwilling to sign longer contractual agreements (due to visible supply constraints), then the Quake hit. (b) Samsung's agreement was for LCD displays; "with other agreements to follow". So, it reads publically of LCD, but interpretatively, DRAM is also being discussed; but not only with them, with several others. (c) dram production was beginning to rise significantly in Asia prior to the Quake as a means of keeping the prices in check; but obviously not fast enough. Nevertheless; current DRAM pricing is an aberation. Dram producers know that in order to keep the PC supply chain running they MUST deliver more and more memory for the same cost, or the same memory for lower and lower cost. Without this phenomenon, they don't expand and, frankly, the PC stagnates. And we know the PC, relative to current and proposed designs, is not stagnating. There is little excuse for MD saying "right on" two weeks ago, and then yesterday his Generals saying possibly earnings "off by 5% to 10%". This too will pass. Nonetheless, if you project $50 billion in revenue in less than two years (their projection), the stock price won't be hanging around $39 forever. They did state "very bullish" on the 4th quarter which leads one to believe they've settled their minor contractual disputes and come to equitable pricing strategies with suppliers. For MD, you can only state that Dell is possibly becoming bigger than Michael? Hate holding a company who is so dependent on the vision of one man anyway. But, if I were to hold a company with future vision, I still prefer having Michael Dell be one of it's main progenitors. One of their "unknowns" for this qtr. remains the positive effects increasing internet sales is having relative to Dell's bottom line.