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

To: mepci who wrote (161177)	9/27/2000 9:33:32 PM
From: rudedog	Read Replies (3) \| Respond to of 176387

mepci - in the last Q, Dell had overall margins of about 22%, with a contribution from servers of 20% of overall revenue. Typical margins in the server business are about 35%, DELL may be a few points over that because of their efficiency. If we assume they had 40% there, than a cut of 30% in the top line without a corresponding cut in the component costs would still be pretty ugly. I have not seen any drop in processor costs for Xeons - in fact, if you are out buying on the spot market, what few parts are available are at a premium. RAM is a significant cost in a server, but hardly dominant in a base configuration - less than 20%. How much of a fall in DRAM price do you think there has been in the last few weeks? If costs fell to ZERO it would not account for a 30% discount on the base price. has there been a big drop in labor costs, or the metal in the cabinets, or the backplane and other assembly components? Not that I have seen. I'm waiting to see what the announced price cuts really turn out to be in the product line - maybe it is in selected models and not really an overall cut of this magnitude.. Maybe I am over-reacting, but this does not seem like the kind of move a confident company trying to maximize profit in a production-constrained environment would make.