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

To: D.J.Smyth who wrote (153690)	2/11/2000 1:36:00 PM
From: rudedog	Read Replies (1) \| Respond to of 176387

Darrell - Your well thought out post exactly reinforces my point. Dell experienced (a) 55% growth in server sales and (b) increasing ASP as a result Correct - ASPs of those products are more than 3X desktop ASPs. Yet the overall ASP only increased by a small percentage, despite this huge contribution. Do the math - the desktop ASPs must have declined big time. The server business has higher margins than the PC business. Correct again - server and storage margins are more than 4 times the desktop margins. But here again, we saw an overall DECLINE - so that means the desktop margins were really in the tank... it's pretty easy to do the math, without the enterprise contribution, net margins would have been under 4%. The internet is growing at 100% per year (possibly more now), and to function properly in this space a business needs a server - that includes India and China. True for every vendor, not just DELL. The major falling out at Dell is (a) product shortage and (b) loss of investor enthusiasm. That was the major falling out the last 2 quarters. My prediction is that next quarter the major falling out at Dell is (a) declining ASP and margin with flat EPS and (b) loss of investor enthusiasm. Keep in mind that CPQ and HP just began shipping legacy-free $500 commercial desktops in the last week of January, so DELL did not face any pressure last Q on that front. The story will be different next Q, and if desktop ASPs fall 10% or more, it will take a lot of enterprise sales to make up for that decline.