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

To: Paul Merriwether who wrote (34024)	3/12/1998 4:14:00 PM
From: jbn3	Read Replies (2) \| Respond to of 176387

even Meredith does not know the future demand for his wares. If his competitors cut prices in the "mid to high" segment of the market Dell _HAS_ to follow suit. That is going to bring down the ASP, and the GM(and even the component price cuts won't save them). It is very doubtful that Dell can survive a price war(but I will be impressed, flabbergasted(and shut up!)if it continues its growth rate over the next 2 quarters. You're not listening! 1. First, the price cuts being talked about are primarily in older inventory, which the others are trying to clear out (DELL, because of its model, has none). 2. DELL is the one who initiates price cuts in the new, higher-margin technology, passing savings on to its customers sooner than anyone else can, and garnering market share while squeezing competitor margins. 3. I don't think DELL has to maintain Average Selling Price (ASP) --although it does -- in an environment where component costs are falling. If my sales price is (1997)a function(component costs + margin + labor/overhead) and f(component) decreases by 50% in 1998, tell me why can't my ASP fall to reflect that without reducing unit margin. 4. Now add in the increased market share. I believe that according to latest figures, DELL has about 6% worldwide market share. If that figure rises to 7% next year, while only maintaining margins, that equates to about a 16% earnings increase. 5. Now factor in worldwide sales, estimated to increase by 15-20% this year. That is an additional 15-20% increase in earnings, even if DELL doesn't increase market share. 6. Both Europe and Asia (especially China) are expected to show significant sales growth this year. Regards, 3.

To: Paul Merriwether who wrote (34024)	3/13/1998 8:04:00 AM
From: Jorge	Respond to of 176387

Actually Paul, the next 2 Quarters is EXACTLY the time frame involved for all other boxmakers to even begin to get close to DELL's business model, according to an article I just read in Investors Business Daily.... The article pointed out that, EVEN THEN, in getting close there will be lots of other problems in implementing a BTO sales program.......IMHO, Having any kind of inventory on a shelf, in a Radio Shack, or whatever type of inventory "shelving" there might be, will almost automatically put them behind DELL in sales......BTW, the article talks about the 3-4 week inventory turnaround, average, for all other companies compared to a 1 week turnaround for DELL....This is important also.......You will be surprised if they can keep up this sales pace...I, on the other hand, will be surprised if they don't...(No disrespect to you, you're an investor like I am, but I would put more weight in what an industry insider, like Meredith says, than another fellow investor)..........George