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

To: Jorge who wrote (47000)	6/10/1998 2:25:00 AM
From: Chuzzlewit	Read Replies (2) \| Respond to of 176388

George, I was surprised by the downward revision of growth for PCs worldwide. Up until now CPQ and and Dell have been growing at different rates but not taking customers away from one another. Given the downward revision in total market growth this may shortly come to an end. We may be approaching the time when the competition is for the same customer base. Compaq's experience over the last couple of quarters demonstrates that its model is flawed, and so they are seeking to bypass resellers in certain situations. This could backfire, since they are still using traditional channels for the same computers. We may, as a result, see a rebellion on the part of some wholesalers. At the same time Dell is rapidly expanding into new (for Dell at least) markets, such as China and South America. Continued decreases in component pricing shouldn't hurt Dell, but will hurt companies that can't efficiently manage inventories. Jim Kelley is of the opinion that Compaq is continuing to experience severe inventory problems. My guess (and it is basically a guess) is that Dell is calling the shots in this market. I am also guessing that the biggest constraint they have right now is capacity. In a recent post (sorry, I can't remember who posted it) there was a point made that Dell was looking to increase the capacity of existing plants. The argument put forth in the article was that they could cut costs, bu I think that this probably argues that Dell's major constraint is plant capacity. It makes sense when you consider all of the capital construction going on world wide. So, I look for a period of rapid consolidation around Dell, Compaq, IBM and HWP with marginal players squeezed out followed by a period of head to head competition. My guess is that HWP will be the first to blink in the desktop arena (but will remain strong in the server arena). I have no data to support this -- its just my general feeling. TTFN, CTC