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

To: jbn3 who wrote (44069)	5/21/1998 1:01:00 PM
From: Chuzzlewit	Read Replies (1) \| Respond to of 176387

Good morning Bachman, Why is a decrease in ASP bad? I've been pondering that point for months now. There's nothing wrong with your analysis. Here's how I view the potential problems with decreasing ASPs: 1. if ASP's drop but costs don't drop as quickly (i.e., decrease in gross margin); 2. if demand for the product is fixed (inelastic -- for example like insulin), so decreasing ASP's translate to decreasing revenues; Neither of those arguments seems to apply to Dell, although Jim Patterson believes that they do to some extent. The only argument that I can think of in support of the danger of decreasing ASPs is this: Demand increases substantially, causing great strain on the businesses infrastucture, and as a result, productivity drops. This is essentially my reading of the Boeing debacle. TTFN, CTC