Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

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

To: K. M. Strickler who wrote (38987)	4/26/1998 6:04:00 PM
From: Jim Patterson	Read Replies (1) \| Respond to of 176387

Ken, Perhaps you are right. In the future, management classes may study DELL's management just as I studied Sears and Ford. Anything is possible. One thing that will be discussed is that managing company's books primarily to boost the stock price is not a good long-term strategy. My case and point here is, I don't approve of issuing debt to buy back stock. Especially today when there is no inflation, and borderline deflation. Most likely DELL will end up paying off the debt with more valuable dollars when cash flow is under pressure. Of course this is my negative side showing up. So you think that JIT-BTO cannot fail. Bet ya $1 on it ;) Nothing is fool proof. I question how much of DELL's daily inventory orders are dynamic. I question how much inventory DELL has contracted to accept on a daily/weekly basis? I see a supply contract saying X number of $$ for a guaranteed number of units with a 5-15% flex at the margin at a cost of $$$. As opposed to, We will use you as a supplier and will tell you on a daily basis how many to send us, no guaranties. As a supplier, I would give a better price on the first deal than the second. With Units growing @ 35-40% Y/Y, this is easy and preventing the build up of any inventory is less difficult. You will have a tough time convincing me that if DELL were to experience a 50% drop in orders for 1 month, that inventory would not build up. And if they did not have a build up of inventory in a case like this, would their suppliers not want a higher price for the smaller quantities? From what I understand, in the PC parts business, CPQ still gets a better discount than DELL because they still order twice as many. If that happened, then could the part cost increase of building a lower number of machines off set the cost advantage of JIT-BTO? So would DELL be left with higher costs/machine while the indirect CPQ for instance has fixed cost, but huge inventories that they will discount to move through the channel, putting further price pressure on DELL at a time when dell is forced into a higher permachine cost structure due to the fall off in unit build? This sounds like a failing of JIT-BTO. Can this happen? It is a Definite Maybe. If it did, What would be the result? There are questions that I don't know the answer to, so I can't answer the question. Can PC orders drop by a large enough percentage to start this ball rolling? A better question may be to ask: With Unit demand trends starting to look like they are slowing and capacity growing by leaps and bounds, How long is it before the ball starts rolling. Jim BTW, What do you think about a $1.50 razor blade ?