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

To: D.J.Smyth who wrote (155857)	4/3/2000 10:18:00 AM
From: rudedog	Respond to of 176387

Darrell - as a piece of business it is not significant. But the relationship between Intel and DELL has been an important component of DELL' overall business model, and has contributed a lot to DELL's spectacular ROIC. The series of mis-steps by Intel in 1999 hurt DELL's business and it did not look to me like Intel did a lot to mitigate that impact. The shift to Barrett from Grove at Intel may be driving a less "special" relationship there, and DELL may be responding by playing a little more hardball with Intel. The recent dialog with chic around AMD (followed up by stories in the WSJ and elsewhere) can only be interpreted as a shift by DELL to a more aggressive stance, and away from DELL as the "poster child" for a highly leveraged model using Intel engineering. They may just be "teasing the bear" as they did with MSFT right before the W2K launch, or they may actually be considering a move to AMD as a part of their consumer strategy. This looks to me like a not-so-subtle indication from Intel about one consequence of such a move - no special relationship on the DELL side, OK, none on the Intel side either... Long term, this may be good for DELL as they "break out of the box"... but if these indications really are part of a shift away from a fully leveraged R&D model, it will be an important trend for DELL investors to track. For example, it would probably mean that DELL will increase R&D as a percentage of revenue, which would tend to decrease ROIC - taken in a vacuum, the investment community might view that as a negative, when it might actually be a necessary step in DELL's long term growth, and an indication that they are serious about establishing and maintaining a leadership technological position.