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

To: Meathead who wrote (161193)	9/27/2000 11:32:21 PM
From: rudedog	Respond to of 176387

Meat - I agree with your analysis - I think the margin in DELL's servers before the cuts was maybe 40%, certainly close to that. It also looks like the cuts were on specific models, so this may be a move to shift the "mix" to products DELL has better supply on - for example, the 550MHz parts, especially the 512K cache versions, are much easier to find than the 700MHz parts. I guess we'll have to wait and see - but my sense is that the headlines will cause people to take a second look - I certainly did - and the explanation that these are minor adjustments seems a little weak. The claim that discounts of this magnitude could possibly be driven by component cost reductions seems unsupportable. BTW - based on the processor upgrade costs on the DELL site for the 6450, the cost of a 550MHz 512K cache Xeon appears to be $1,499 to the end user, or $900 cost to DELL. The 700MHz is only available in 1MB and 2MB cache. The 1MB is $2,050 (1230 DELL cost) and the 2MB is $2,650 (1590 DELL cost) - just interpolating from the upgrade costs as best I can. Those actually seem like pretty low prices. So to really see what they are doing, we'll need to look at what prices change, with what options, and when. If you are correct and this is a combination of "sell what you have" with the intention to sell up to models or upgrade options which are not discounted, it may be a sound strategy - but if that's true the "cover" message is very strange. But thanks for the thoughts, I fell a little better about this.