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

To: Jim Patterson who wrote (25857)	12/19/1997 4:53:00 PM
From: Meathead	Respond to of 176387

Well I have a few points to discuss on margins however I mucked up the numbers somewhat in my analysis... I'll repost the correct version later today for people keeping score. MEATHEAD

To: Jim Patterson who wrote (25857)	12/19/1997 7:09:00 PM
From: Meathead	Read Replies (2) \| Respond to of 176387

Re: Remember, with this type of company, if growth stoped, they would loose money in the quarter. This is not true. You get flat to negative earnings growth if unit growth stopped. Negative earnings growth if unit growth decreased. You're forgetting COGS and OPEX. A loss would require many quarters of declining unit growth coupled with declining margins... or, a large writeoff to fix a bad business decision.. or, a price war so severe that ASP's disintegrate in relation to component costs. Dell's Gross margin would have to decline from 22% to 12% for them to break even on the quarter. You can't predict what it would take to maintain gross margins based on revenue and unit growth only, you need revenue and COGS. COGS is mainly a function of material and component prices. GM = (Rev-COGS)/Rev. Increasing revenue (units x ASP) does'nt tell you much about net margins either unless you know COGS. MEATHEAD