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Technology Stocks : Compaq -- Ignore unavailable to you. Want to Upgrade?

To: CENTrader who wrote (17925)	2/23/1998 2:25:00 AM
From: Jack T. Pearson	Respond to of 97611

Bill, Please excuse me for responding to a message directed to hpeace. Lets assume that Dell has 7 days inventory and Compaq has 24 when a component manufacturer ships a new product with new capabilities, higher performance, or lower cost. Dell will have 17 days when they can gain market share by lowering prices or offering higher performance or during which they can increase their profit. Compaq can either give up market share or take a lower profit. Lets assume this type of opportunity occurs about twice each year for each of the following components: diskette drives, hard drives, sound cards, video cards, CD ROM drives, memory, monitors, CPUs, and power supplies. In advertisements, guess whose products look like a better deal? Can Compaq catch Dell in this regard? I suspect not. Dell will continue to improve and they don't have a retail pipeline they have to fill with inventory. Dell only builds what they sell. Compaq builds for what they forecast consumers want. What consumers don't buy becomes rapidly obsolete and must be sold at discount. What does that do to Compaq's and their retailer's profits? Not a problem for Dell. I think I just talked myself into buying more Dell stock! Jack