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

To: K. M. Strickler who wrote (39813)	5/1/1998 9:48:00 AM
From: Jim Patterson	Read Replies (1) \| Respond to of 176387

My argument is not Who is going to need it. That is one misconception about the bear story. The bear story centers around the fact that Revenue growth in the industry is slowing despite the increases in power. Eventualy that trend will destroy the profitablaity for most companies in the group / industry. Jim BTW The bulls Have to just love these gaps up, expecialy on top of the already huge advances made. That is supposed to be Bullish, Right ?

To: K. M. Strickler who wrote (39813)	5/1/1998 12:41:00 PM
From: Jim Patterson	Read Replies (2) \| Respond to of 176387

Here is an example of what I mean about Revenue not growing in the Technology group. Besides INTC's, 6-quarter problem and CPQ's 2-quarter problem, Samsung announced a 256mb DRAM in samples with full production and availability in Q1 1999. Now Bit growth is about 70% now, down from 100% 6-12 months ago. The 256 will replace the mainstream 16 and the cutting edge 64. It is made on .25 and is the same size as a 64. 64 is 4 X 16, 256 is 16 X 16 or 4 X 64. So if a plant goes to 256's from 64, that is a 400% increase in capacity. If a 16 plant converts, as I expect MU to do, by passing the 64's to some extent, that is a 1500% increase in capacity. Bit growth is 70%. The new parts will be priced above parity at first, but it won't take long for the same pricing environment that finally occurred with 4's and 16's to occur. Net net, as capacity is converted from 16 or 64 to 256 to take advantage of the higher prices and higher margins, a situation of overwhelming over capacity will arise, pricing will plummet and industry revenue growth won't happen. This time it should be worse than when the 16 took over the 4. The same thing is happening with PC's, but it is very subtle now, and the capacity increase is not as sudden. As the trend accelerates, it will become visible, but by then the selling in the stock will be over. For INTC, everyone expects their migration to .25 and P II to return them to revenue growth. The problem is that right now have too much capacity and converting to .25 will only exacerbate that problem. Plus the PII carries lower margins than the old chips. One more on .25, some one correct me if I am wrong on this, it appears to me that .25 works better than .35, good die per wafer is higher further increasing the capacity situation. DELL is best positioned to take advantage of this situation with JIT-BTO, but the capacity issue will continually aggravate the inventory issue with the competitors. Price declines will not let up on APSs, which will continue to causes margins to shrink. Companies with shrinking margins don't trade at premium multiples for long. Needless to say, I have given up on the short position for now, but I will not stop my crusade :) Jim

To: K. M. Strickler who wrote (39813)	5/1/1998 1:11:00 PM
From: rudedog	Respond to of 176387

Ken - Good posts, I would like to add a few comments. How about the server that will run up to 8 processors. Don't you think for a minute that the CPQ/DEC 'pucker' string won't twitch a bit Intel is using 8-way technology developed by CPQ and Corallary, (Intel bought Corallary). They will have to pay CPQ royalty on systems using the technology no matter who buys - i.e. Dell will be subsidizing CPQ R&D if they sell Intel 8 way systems. CPQ is probably rooting for great success of that market. that is coming with the USB and SCSI-3, along with RDRAM. Don't forget about 1394, which is the big brother of USB. 1394 is really the high-speed, high-bandwidth channel for the next generation of machines, USB is consumer oriented.