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 (44008)	5/21/1998 1:48:00 PM
From: Jim Patterson	Read Replies (1) \| Respond to of 176387

Hi Ken, The 'other' manufacturers reported fantastic unit growth. It was profits that they lacked. HWP said today that April cost them the quarter. Their PC division may have lost 10 cents in the month of April trying to match CPQ and IBM on price. They are not going to be as aggressive on market share and more aggressive on profits going forward. The problem is that CPQ still has huge inventories of machines that are only 2 months old. 2-month-old machines are not antiques yet. Add in the 3-5 billion charges that I expect CPQ to take this quarter and they will be able to keep the pricing pressure on. IMO, IBM sees the PC division as a cost of doing and getting other more profitable business, I model I think CPQ is going to develop into. So everyone is expecting pricing to stabilize in Q3 and Q4. Except INTC has 2 price cuts coming before the end of Q2. This is a component price cut and will lead to lower prices. But even with higher GM, DELL's profit per machine declined. That is not a healthy trend even if you can grow units @ 60%. That 60% will be tough to maintain if the slowing in the AP continues. (AP growth slowed seq. from 80% to 35%). The 10GB disk drives. How long will it take the software industry to need all of that space? Win 95 is some 100MB. 5 years ago, that was 50% of a disk drive. Today, assuming 4GB drives in new machines on average, it is only 3%. Say Win 98 is 2 x win 95, which it is not, this brings us up to 6% of the drive. I have a notebook with Win95 office97 ie 4.0 and a few games and over 100MB of stock data, The drive has 601MB available. Lets say I add speech recognition to it, another 100mb, I still have 25% for new data. That is a lot, and with over 1 billion unsold 100MB-zip disks floating around, I don't see a storage crunch anytime soon. And SEG, QNTM, and IBM are still doubling capacity on a regular basis. Enough about increasing the capacities of the options of a PC box. You are correct, Dell, being a very well managed company, will change to meat the needs of the market. I think that change will lead to lower profits, a lower ability to beat EST's, and ultimately a lower stock price. Jim