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

To: JRI who wrote (146215)	11/1/1999 10:40:00 AM
From: rudedog	Read Replies (4) \| Respond to of 176387

John - Good post, but I disagree with some of the details... Look at how Dell's margin has risen over the last 2/3 yrs... It looks to me like it has been essentially flat at about 23% give or take a point, for a long time. Neither getting better nor getting worse. Also, I think you vastly underestimate the damage Dell's direct model has done, is doing to the rest of the industry... An axiom of the "church of DELL" is that industry trends are a result of DELL's direct model. But as far back as 1994, the trend in the PC business was clear and it was not as a result of DELL's direct model. DELL was not a major force in 1994. It was Intel and the increasing grip they had on overall chipset and PC engineering that was driving the trend. That was the beginning of the hardware specifications Intel drove through MSFT which had the effect of "leveling the playing field". One could argue that DELL was a proxy for Intel's game plan but hardly that the direct model drove the shift in the PC marketplace. I think it would be more accurate to say that of all the major players, only DELL drove a business model which could thrive in the new environment that Intel was creating. And the close relationship between Andy Grove and MSD had a lot to do with that... I am not arguing with the results, and I agree that DELL should see decreasing margin pressure going forward. I Also agree that DELL differentiates in the marketplace on "customer experience". That is a real differentiation, hard to achieve, and currently out of the reach of DELL's competition. I just disagree that the direct model changed the industry. I think instead that it enabled DELL to thrive in an environment that weakened the competition.

To: JRI who wrote (146215)	11/1/1999 12:59:00 PM
From: Mani1	Read Replies (3) \| Respond to of 176387

Re <How do you justify your statement? Are, now, component prices going to rise <if ever..> ad finitum...> I have explained my thoughts in previous posts, I'll do it again. Dell's just in time inventory benefited greatly due to rapidly declining component prices. That has already stopped and WILL NOT continue going forward. That means Dell's extremely low inventory is not an advantage, maybe even a liability. Currently fab utilization rate at 0.25 micron is very near 100%! (full production 24/7) This is very important to understand. As 0.35 and older fabs were outdated, they were only upgraded and not enough new fabs are being built to keep pace with rising demand. That means the only way to increase capacity is to built new fabs or upgrade to 0.18 or 300 MM wafers. Neither one can happen fast. DRAM prices were artificially low due to over-capacity. Korean among others had overbuilt fabs financed with debt. They had to keep producing at a loss just to keep the fab going. They had Billion dollar fabs depreciating and they needed cash flow. DRAM prices among with many other semi based components continued to lower. Considering all the IMF finance reforms, we will not see another over-capacity like we had in recent years. Prices of DRAM and other components will not crash like they did. Re < there is little evidence to suggest you are right on this account...Show us one analyst, article that states this is the case, please...> There are mounds of information and links to justify what I said, if you are interested you can look them up. Listening to the CC from the likes of AMAT, NVLS and LRCX helps also. I find it a bit strange that analyst who follow likes of DELL and GTW know very little about semi, its cycles and fab capacity and its trends. DRAM pricing did not sneak up on DELL, it was long time coming. Taiwan quake also had little to do with DRAM supplies, DRAMS DO NOT COME FROM TAIWAN. I also do not know where you got your idea of "Dell's margin has risen over the last 2/3 yrs."...... Not correct. Mani