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To: Frodo Baxter who wrote (331)	5/8/1998 1:11:00 AM
From: Mike McFarland	Respond to of 2025

re Dell: (I'm just ranting, maybe I will go over to the Kahuna or one of the shorts threads...) A market capitilization of 55B... a stock which costs $86, to buy a buck or two worth of earnings... and a business model which depends on people and business who are willing to pay a large premium for a marginally better product than competitors sell... (tho I would conceed that Dell machines seem to be considerably more reliable than a couple of manufacturers) I would not want to own Dell at the beginning of the next recession... Funny blurb: A column in Forbes a year or two ago listed Dell as one of a handful of stocks which were probably over-valued. I think it is up something like 400% since that article.

To: Frodo Baxter who wrote (331)	5/8/1998 10:56:00 AM
From: Pierre-X	Read Replies (2) \| Respond to of 2025

Re: Business models Does the $2500 that Mark mentioned include a monitor? One of my favorite economists, Paul Pilzer, talks about how the great fortunes in the beginning of the century were built on manufacturing technologies. Back then, the production cost was 70% of the final price, and distribution costs, 30%. So a 50% reduction in production cost translated into a 35% drop in end-user price. Nowadays, the production cost is typically 20% of the total, and distribution is 80%. Ergo, increasing manufacturing efficiencies results in a much smaller impact. Pilzer predicted that the great fortunes of modern day would be the result of enhanced distribution processes. Ergo, Dell. (and Cendant, and Costco ...) Now, where does Microsoft fit in to this picture ... God bless, PX