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 Bear Thread -- Ignore unavailable to you. Want to Upgrade?

To: lin luo who wrote (1038)	6/13/1998 11:28:00 PM
From: lin luo	Respond to of 2578

-----OT-------Asian market (cont) You probably have heard many stories why Asian market crashed. Basically people blame the stupidity of the leaders or not all-open markets in those countries. This is my story of how the Asian market crashed. It first started with G.S., the great speculator of our time, tried to make some quick bucks to support his Russian adventure by dumping his dirty money on the weakest spots in southeast Asia, it is like armed force to rob a corner store. I remembered right after the first round selloff of these country's currencies, he denoted $500 mil to Russian's joint ventures. No, no, he probably can not invest these money directly because of the tax purpose. It is just like you have already owned 80 % shares of DELL and then denote $500 mil to DELL. He probably thought the story ended there. No! These countries owned a lot debts to Japan and Hong Kong. People there were hit by the the debts defaults, so the Hong Kong market tumbled. That is what happened last October. These markets are mainly invested by the US mutual funds whose fund managers are not experienced with currency trading. China and Japan are the most powerful countries in Asia right now. Hong Kong's problems also severely affect China's export ability, where their currency is controlled by themselves. If China lower their Yuan today, Wal-mart will lower their prices tomorrow....(see my previous discussions) The commodity prices around world are priced by the US dollar. If China lower yuan, it would be difficult for them to buy raw materials in the world markets. That is really what they don't want to see and neither will the US. The trip of Clinton to China will have important discussion on the issues. The solution I think should be: China will not devalue their yuan with some guarantees of some kinds of commitment from the US. Last note, what about the Russian's market, lost 50% so far this year? Do you think our great G.S. making money? Homework for everyone?

To: lin luo who wrote (1038)	6/14/1998 12:15:00 AM
From: rudedog	Read Replies (2) \| Respond to of 2578

At least they can lower the prices to break even if they have to. Dell's gross margins are about 20% and net about 6% so they could not lower price very much without losing money. A 400MHz PII which sells for $2600 today could be sold for $2450 tomorrow, and Dell would still make a profit or at least break even. (that's just an example, don't try and find that price on Dell's web page). But selling that box for $1000 would imply that they are losing $1450 on each box. If they did that across the board they would be out of cash in 90 days. Not really an option. But they could not even lower their margins by more than a few points, let alone down to break even, because that would demolish the earnings growth model on which Dell's lofty stock price is based. I don't know how well the Dell community would react to having employee options and stock holdings under water.