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

To: jim kelley who wrote (147657)	11/18/1999 1:05:00 PM
From: edamo	Respond to of 176387

jim...re: dram pricing if prices are "renegotiated as needed", then there is a flaw in the dell "perfect" model. even with a jit model in place, long term contracts are negotiated with max price escalation per year for the contract duration. japanese have been doing it for forty years. to do otherwise puts an unknown into the model and places one at risk to the vagaries of the market. inventory is involved in a jit model, but it is not held by the buyer. so...if prices aren't firm or within a known escalation, then how does dell survive in shortages or bad economic times? does dell sell its corporate clients with a "price in effect at time of delivery" clause?

To: jim kelley who wrote (147657)	11/18/1999 2:40:00 PM
From: rudedog	Read Replies (1) \| Respond to of 176387

Jim - Here again you are mis-informed. DELL's long term DRAM contracts purchased a block of production at cost. They were required to take all of that production. They supplement that with additional medium term contracts which may be above or below production cost but are below spot costs. In the event that requirements drop below the base supply. DELL is a seller of the DRAM they have contracted for, on the spot market. This has happened from time to time. Likewise, CPQ contracted for production at cost for the bulk of their DRAM. But because of their supply chain, they took larger amounts - DELL prefered to remain agile by putting a larger portion in the more flexible contract arrangements. So both companies locked in long term price without taking significant inventory, although CPQ took more inventory than DELL. You should do a little more research before you dig yourself in deeper here...