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

To: Mani1 who wrote (146207)	11/1/1999 8:44:00 AM
From: OLDTRADER	Respond to of 176387

RE:Mani-You may be right-could well be-I'm just of the personal opinion you may be surprised.wbm

To: Mani1 who wrote (146207)	11/1/1999 9:00:00 AM
From: JRI	Read Replies (2) \| Respond to of 176387

<Due to industry conditions, the business model will be less of an advantage, thus pressuring margins....You will not see 8.x% margins for a while, maybe ever.." Eh? Look at how Dell's margin has risen over the last 2/3 yrs...as Dell has shifted to a greater mix of middle/high end margins and services in its product mix.....this trend will continue, albeit with unusual interruptions (like Taiwan) occasionally taking place... How do you justify your statement? Are, now, component prices going to rise <if ever..> ad finitum...there is little evidence to suggest you are right on this account...Show us one analyst, article that states this is the case, please... Also, I think you vastly underestimate the damage Dell's direct model has done, is doing to the rest of the industry...you openly have analysts and even management of several of Dell's competitors question whether or not they should even stay in the PC business.........this was unthinkable a couple of years ago........it is hard to see where the rest of industry has "narrowed the gap" or successfully implemented the direct model in any significant way.........in my mind, this year, Dell's problems have been related to OVERALL industry conditions became more difficult (due to a confluence of factors).....Dell has been affected (along with many of the other companies) this year......BUT NOT because of being the "narrowing of the gap" between Dell and others...look at the recent Dataquest figures....Only Gateway and Dell are clearly showing above-trend growth....What do those two have in common? It is also clear (as Dell's management often has said)..it is simply difficult to sustain growth rates of 50, 60% with a company of xx billion in turnover.."the law of greater numbers"....These two factors (law of bigger numbers, overall industry difficulties, ie. Taiwan, etc.) are the factors MOST impacting Dell (the company, the stock) this year... If some of Dell's major competitors scale back/eliminate their presence in the PC space...that is going to have a permanent affect on competition....easing margins...you failed to mention that.... Also, this year, both IBM, HP, and CPQ have basically indicated that they no longer want share (at the expense of price/margin)...UNLIKE 1998, 1997....Sure, a little of this is/will still go on....but nothing like the last couple years....this also will have a (positive) impact on Dell's margins..much more than your unsupported (by facts) comments about Dell's competitive advantage decreasing... Also, re: differentiation....you need to read the Fortune article (May 1998).....Dell does differentiate itself from its competitors..but in some ways that are not related to making the box (ie. premier pages, "burning in" software, tagging, direct delivery to particular sites)..this "value-added" services often win accounts (due to its differentiation) from its competitors... I do not/can not disagree with the thrust of your argument that the perception of Dell (the stock) has changed this year....and some damage has been done...only time will tell if this damage if reparable.....but, long ago, most Dell bulls felt like xxx% return was an analmoly....that a more proper benchmark would be 30% (or better) p.a....before Taiwan, Dell was well-on-track to do that...if Taiwan turns out to be the blip that many think it is...Dell (the stock) should continue to perform well (compared to the averages)...although admittedly not at supersonic stock growth rates... Then again, who knows?? Look at Sun Microsystems in mid-1990's...and then 1998..and then 1999....notice a little flat period in there <G>