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

To: jim kelley who wrote (41011)	5/8/1998 2:10:00 PM
From: rudedog	Read Replies (2) \| Respond to of 176387

Maybe Paul could help with this, but my understanding is that merger costs are not charged against cash. I don't see how the 1-time merger costs affect the overall cash position. I believe that in fact Mason and crew will load as much trash onto that barge as they can, this is a traditional 'get out of jail free card' and the gentlemen's agreement on the street is that's OK. I do agree with your position on overall margin for EVERYONE in the server and workstation business. I also think that Dell has a more compelling proposition both in business model and execution in the areas where they currently have product and that they will continue to do well there. In fact I think that CPQ will put less emphasis into trying to counter Dell in those areas, which should help Dell. Why would CPQ do that? Because their goal with the DEC acquisition is to change the game, for Dell as well as for IBM HP and SUN. Against the big guys, CPQ has a higher efficiency model and a more integrated business line, but now the same end to end service and support capability. For Dell, CPQ presents a barrier to entry at the higher levels of the enterprise, since those customers see hardware and software as less than 15 percent of the equation for their purchase decision, and Dell has shown no interest in developing the other service capabilities. If Dell instead concentrates on the segment it is currently in (mid-high end PCs and low-mid servers), its inherent advantages in that space should drive out most of the other players, CPQ included, and allow Dell dominant share. Dell could easily expand down if that became necessary for revenue growth. This is not a zero-sum game, the shift in CPQ strategy is why I think that both Dell and CPQ can win near term (12 to 18 months) - CPQ's strategy will present an opening for Dell but CPQ will more than make it up against IBM and HP and particularly SUN who is very vulnerable with no NT strategy and also no service capability. I don't think CPQ screwed up big time - I think they had some minor hiccups in their bold move to change their business model. I also believe that Dell will have a similar challenge sometime in the next year and a half. I have not seen anything publicly or on this thread about how they plan to do that, and the company's own pronouncements give no hint that they are thinking about the issue. None the less I am beginning to suspect that they do have a plan and are executing on it, but that they want to keep a very low profile until they have tested the idea with the street and industry insiders. I will offer my opinion on this when I get a little more information, which may take a while. Any thoughts or info anyone may have on this would be appreciated. BTW I am NOT talking about a simple change in the execution model, like moving more sales to the web. BTW keep ip the conversation, my bark is worse than my bite - rDog