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

To: Chuzzlewit who wrote (148509)	12/4/1999 6:07:00 PM
From: Sig	Read Replies (1) \| Respond to of 176387

Hi Chuzz: It appears from the news that Web use and on-line sales will exceed the most optimistic expectations. One site tripled their servers and then quadrupled them a week later. One site processed 1 mm orders in the past month. The NASA Mars site is jammed, opening 20 extra URL's or more to accommodate traffic. And generally the Web is running slower. ISP's unreliable Conclusions: 1. This Christmas season will define the winners- those ISP's that are willing to spend to handle the traffic, and those companies prepared to handle many on-line buyers 2. YR2K problems are forgotten-(temporarily) in the rush to get on-line 3. Servers will be the big requirement, and I can't think of any company more flexible than Dell to provide those on short notice. Even if there is a short supply of the hottest INTC chips, it is possible buyers will accept slower models to keep business going until the shortage clears up. 4. Computer component shortages ,especially the fast chips and large screen LCD's, can be looked upon as a positive for the industry. (Demand exceeds supply, desire for latest technology with better ASP) 5. Donnies comments on Austin activities supports an assumption that Dell is very busy. Altogether Dell quarterly revenues should exceed the estimates, but margins remain mystery. Sig

To: Chuzzlewit who wrote (148509)	12/4/1999 7:28:00 PM
From: Mike Van Winkle	Respond to of 176387

Chuz, it is hard not to mix everything together in discussing Dell. In discussing inventory for instance, it is not just optimizing inventory levels, that would be suboptimizing. Inventory control is part of an integrated business process that includes vital business information flow from consumer to supplier and supplier to consumer, quickness of response to market, technology changes (which are accelerating), and many other process issues which are hidden. Cash flow projections and their meaning (I bow to your analysis) assume insight into the future of a company. How does one know whether the numbers will play out? A company could crash and burn or get better. A black box financial approach won't tell you if the assumptions are good over the 5-10 years of the cash flow analysis. The company stock did not fly this year, should I sell or hold? Answers to these questions assume the cash flow projections are valid. My point of view is that Dell's success comes from optimizing processes (not inventories) over the domain from supplier to consumer back to supplier. Tough, in the trenches, strategic improvements made with a complete process outlook, implemented over time, are Dell's now unstoppable advantage. Integrating the internet is just part of the improvements (an immense one albeit). Dell's competitors have not been making these same improvements which take years to make and therefore have irrecoverably fallen behind in their cost structures(checkmate). So, as I see it, your cash flow assumptions that are projected out over time are (I strongly feel) valid for Dell. For me they were the missing piece in valuing Dell. I would not feel comfortable using cash flow valuations on any other company though, especially Dell's competitors because assumptions are everything. Cheers Mike