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

To: Sonki who wrote (20664)	11/5/1997 2:01:00 AM
From: jim kelley	Read Replies (3) \| Respond to of 176387

Sonki, Intel is willing to cut its profit margins to make sure that AMD and CYRX or IDTI do not get a firm foothold in its market place. To that end INTC pricing actions have resulted in neither AMD or CYRX making any money at all with their competitive products. Of course that can not continue forever. INTC will own the processor business and command the premiums that a monopoly can command. Marketshare is more important to INTC than short term profit. So INTC must be viewed as a long term investment. The Boxmakers are a different story. CPQ, HWP , IBM, MUEI and GTW have been attempting to match DELLS direct model efficiencies. It appears that CPQ has been the most aggressive of the lot. I am not concerned at this point in time with Walmart or CompUSA. Walmart's supplier (ACI) is less than credible. CompUSA is competing with its own suppliers. None of them has actually succeeded in implementing DELL's direct model. This includes GTW and MUEI. GTW has inventory problems which should not exist with a true direct model. MUEI is close but seems to be missing the mark too by a wide margin. CPQ, HWP, and IBM are actually competeing more with each other than they are with DELL. Although, I am sure that they run into DELL sometime in corporate accounts. They certainly do not run into DELL in retail stores. Meanwhile, DELL continues to innovate and extend its direct model. DELL is also moving aggressively into the mid range server market. I expect DELL to continue to grow both profits, and revenues at a rate significantly greater than its P/E for at least 18 months. I really could not ask any more of DELL's management. Now you have to ask yourself whether such phenomenal growth merits a higher P/E? .....Higher than CPQ and HWP and IBM. For me the answer is easy. They deserve their P/E as long as they can maintain their earnings growth. When the earnings growth rate slows, we will see the P/E reduced. But that has not happened yet. I expect them to meet or exceed their targets for this quarter and next. The bears would have us throw the stock out because of unsubstantiated fears that the competition has DELL in its sights. Most of the competition belongs to the gang that can't shoot straight and does not make any money. The rest of the more competant competitors have each other in sight more than they have DELL in sight because they occupy the same retail sales channels and are competing face to face. They can approach DELL's old efficiencies but they can not match them without abandoning their current business models. Such an abandonment would result most probably in a disruption of their current business relationships and a disruption in their sales. Thus DELL will continue to stay ahead with its business model as long as they have the will to compete, innovate , and expand their business model into new areas. They have demonstrated that will to date. The low cost PC is not a threat to DELL. It is a threat to other companies in the retail channel. The branding associated with the sales of low cost PCs is not worth much and will not stand in the way of DELL getting the second and third time PC purchasers. These are my opinions and I hope they help clarify the current situation for DELL and its stock. Its regretable that so much BS and fear has been thrown out into the market. I much prefer discussing each salient issue to determine what its impact may be on DELL stock price. There is no doubt that this disinformation has a big impact on stock prices. Regards, Jim Kelley