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Technology Stocks : DELL Bear Thread -- Ignore unavailable to you. Want to Upgrade?

To: XoFruitCake who wrote (150)	3/15/1998 12:18:00 PM
From: Ramsey Su	Read Replies (3) \| Respond to of 2578

Manwah, Denise, China Trader and Thread, I have a few questions that you may be able to shed some light on, regarding the B-T-O. DELL is undoubtedly the leader in BTO. I can see how this model benefited DELL in the consumer market. They don't even have to guess what the consumers want, just make what they order. What I don't understand is how this model benefit DELL in the business sector, servers and corporate clients? Do you suppose that the CIO of some big corporation, when making a major purchasing decision, sign on to the internet and buy 500, 1000 PCs or a multi million dollar order of some combination with a corporate credit card via the internet? Wouldn't it be more logical that he/she solicit bids from each of the major vendors? I seriously doubt that HWP, IBM, CPQ would go back to the buyer and say "sorry, we only have these configurations to choose from, take it or leave it." They will be bidding on a BTO basis, just like DELL. What is DELL's advantage in this case? Is it possible that DELL's high growth in this sector is merely a reflection of the sector, not DELL's specific performance? Is it possible that IDC type growth rate data are only for the consumer PCs, excluding growth in other sectors? Does anyone here actually subscribe to the pay services such as Dataquest and have better breakdowns? Thanks in advance to any response. Ramsey

To: XoFruitCake who wrote (150)	3/15/1998 5:16:00 PM
From: Jacky AY	Respond to of 2578

from a production efficiency perspective, I have to believe that producing thousand of same PC would be more cost effective. You got this right. Comparing the gross margin between CPQ and DELL, you should find the number interesting... CPQ DELL 1997 27.5% 22.1% 1998 21.6% 20.1% 1999 23.8% 20.0% 1997 figure for CPQ is for FY97 ending in Dec; for DELL it is for FY98 ending in Jan 98. Data beyond 1998 are predicted by BARS. I don't know how those numbers break down into desktops, servers, and laptops. Maybe CPQ's sales in high-end server more than compensate the low-end low margin desktops. However, ANALysts see gross margin for the entire PC sector going down from now on and may not recover. It seems to me shrinking margin is a direct indication of lower ASP and more stable component price in foreseeable future.