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: Geoff Nunn who wrote (48556)	6/22/1998 8:02:00 PM
From: Techie	Read Replies (5) \| Respond to of 176387

Do you have any evidence to prove that CPQ, HWP & IBM are subsidizing their sub-1k or are you just telling stories? According to what CPQ has said, the sub-1k is very profitable. Dell has been in business for a very long time and it's only the last 2-3 years they've done any business to speak of and they only have a 7.5% market share after 15 years! Whether or not it's wise for them to ignore the fastest growing segment of the PC market remains to be seen. It's easy to grow faster than the market when you are tiny. Let's see if they can keep it up now that they are playing in the big leagues.

To: Geoff Nunn who wrote (48556)	6/22/1998 8:08:00 PM
From: stockman_scott	Read Replies (3) \| Respond to of 176387

Geoff: You are right on target. You provide more good reasons to own only one hardware mfg. firm -- DELL. I doubled my position in DELL last Friday! I really feel that DELL will be trading between 175 and 200 by the end of this calender year. Look at some of the things that are already reality or will soon be reality for DELL: - more positive contract information - favorable annual meeting announcements - an inevitable stock split announcement - very positive market share developments - significant new mutual fund buying - continued company buy-backs of large blocks of shares - new analyst upgrades - over 50% of all sales generated on the internet by the year 2000 ** DELL continues to be the best positioned vendor with a broad product line and a global geographic scope. They will continue to gain market share and improve efficiency. This will lead to higher shareholder returns. Going Long on Dell is one of the easiest decisions a smart investor can make. The trend will be our friend. Have a good evening everyone.

To: Geoff Nunn who wrote (48556)	6/23/1998 11:00:00 AM
From: rudedog	Read Replies (1) \| Respond to of 176387

Geoff - I agree that Dell is smart to reduce their exposure in the sub-1K market as long as they can maintain their growth in higher-profit lines. Knowledgeable people on this thread have discussed the economics of this for Dell and it's just not the business for them at the moment. I think that the idea that sub-1K in general is not profitable for CPQ is harder to justify. We need to separate the products which were designed for a $1500 price point and then unloaded at $999 (the commercial inventory which needed to be cleared out of the channel) from the consumer products designed from the get-go to hit that market. Margins on CPQ's consumer products are a little lower than Dell's target of 22% but CPQ's COGS is also lower on those products since there is typically no middleman - they are sold directly to the retailer. The consumer distribution is very efficient both in production costs and distribution. It is just not well suited to the JIT model, so Dell would be at a competitive disadvantage. If Dell ends up moving into that market they will have many of the same challenges now facing CPQ - a conflict between the direct model and retail sales. They will have the additional disadvantage that the volume production and distribution model has cost advantages over Dell's production methods in this market space. Dig back in the thread and you will see a lot of good analysis on this point from Chuz and others.