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

To: JRI who wrote (45011)	5/27/1998 4:38:00 PM
From: Jim Patterson	Read Replies (1) \| Respond to of 176387

RE: <<<<I don't quite understand your giddiness in recent posts. You continually state, "I told you so". What did you tell us that we didnt know? That ASP's are falling in the computer industry? Hasn't this (for the most part) always been the case? Isnt this modus operendi (sp?) for Dell? Isnt their model the best to take advantage of this (prosper, even!) in such an environment? >>>>> ASPs were stable to rising for about 18 months ending in late 1996. DELL in their Feb eps report said that ASPs would not be under pressure. Looks like they were wrong on that one. DELL can take advantage of lower component prices better than any other box maker. What hurts them is when they can't move to better larger higher end components as they come down in price because the end user is not demanding all they can deliver. This is IMO the very reason DELL did not meet the whisper number. Buyers were content to buy fully configured machines and had no need to add expensive high margin options to them. This is a broad generalization, so don't try to hammer me on it. <<<<<..., let's say that severe price cutting continues every quarter going forward (with no end in sight)...in a year or two, how many of the current PC makers are going to want to continue operate in such an environment (especially the clones)...how many investors are going to want to invest in companies that operate billion dollar, no profit businesses (with no hope of future profits>>>>>>> IBM and CPQ will want to be there. IMO, both companies see the furture of the PC industry as: Selling hardware to get the service and support business. They want to sell solutions, and the hardware is only a fraction of the total bill, and hence they will not be reluctant to use that as a teaser to get the deal. Net net, Hardware will simply become a cost of the sloution business. I have been giddy because I have made up about 50% of my losses on DELL since the EPS report. But I did cover some today. The rally will be very important. The price movement of a stock is not always corolated with the fundamentals of the company. If dell's growth rate slows, or if margins take a hit, or ASP's drop enough to scare people, or heck, if people just get scared, the stock could drop a lot. All of this and the company comes in with 35% growth. If DELL's growth slowed to 35%, which is pretty good, the stock will fall. Why, because 50%+ has been discounted. It does not look like that is going to happen going forward. But we will se. jim