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

To: Lee who wrote (145354)	10/20/1999 2:10:00 PM
From: D.J.Smyth	Respond to of 176387

Lee good point. If Dell's unit numbers are higher than most analysts are expecting, this alone could overcome a short term squeeze on operating margins and Dell would still make $.19 to $.21 in earnings.

To: Lee who wrote (145354)	10/20/1999 2:45:00 PM
From: Gabriel008	Read Replies (1) \| Respond to of 176387

Lee, the analysts have interpreted this short-term margin pressure as impacting the EPS [although DELL didn't in fact state they wouldn't make their quarter]. Consequently, the major brokerages have downgraded DELL and/or reduced DELL's Q3 earnings to the 17 -18 cent range. However, it is entirely possible that if DELL misses it may not be by much. Here's why. Q3 sales are heavily backloaded [roughly 30% to 35% in the last 3 weeks]and this is where the incremental [read unbudgeted] $70 to $75 in DRam costs per unit will be incurred.They could do some very creative things in this time frame such as switching customers to different configurations and/or actually passing on the DRam cost increases. Although my business model recalculates DELL's Q3 at 18 cents, based on 20.0% GP [versus 22.0% in Q2] I believe that DELL has the means to achieve 19 cents and maybe even 20 cents if they can achieve a minimum 15% sequential unit growth, maintain ASPs at parity with Q2 and somehow maintain GP's in the 21% area.They may not be able to do all three but some combination of the three might permit DELL to surprise the market on earnings day.