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

To: rudedog who wrote (41023)	5/8/1998 2:38:00 PM
From: Chuzzlewit	Read Replies (1) \| Respond to of 176387

Rudedog, I agree with much of what you said, but do have some specific points of enlargement or disagreement. 1. Cash is cash. It's what you have in the bank at the end of the period. It is a tangible balance sheet item. The real question is how the accounting charges are made for non-cash items, and how accurately they are done. 2. I agree that there appears to be increasing divergence between the business niches of Dell and Compaq, but that given the relative weakness of Compaq's manufacturing and distribution systems (vis a vis Dell) they needed to provide the large corporate accounts with a reason to continue to buy Compaq. In other words, I don't see them moving into the service end of the business as accretive. It will become the basis for their hardware business or else they will be caught between the opposing forces of Dell and Gateway on the one hand, and companies like IBM on the other. 3. You say that this is not a zero sum game, and so far you have been correct because the total market has continued to expand at a slower rate than the rate of expansion of Dell and Compaq. However, at some point Dell will begin to expand at Compaq's expense because of Dell's more efficient business model. That's why I think the merger was necessary for Compaq. 4. You said that you don't believe that Compaq "screwed up big-time". On this item I vehemently disagree. Compaq's screw-up occurred years ago when they became arrogant. Their arrogance was manifest in three ways: first, they felt that the name Compaq was sufficient to command premium prices. This was exactly the mistake that IBM made in the early 80's which allowed Compaq do gain a foothold. Second, they ignored a lower cost, highly flexible manufacturing system capable of providing consumers exactly what they wanted. In other words, the errors were not made in the past year so much as they were made around ten years ago. All my opinion, of course! TTFN, CTC