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

To: Geoff Nunn who wrote (49181)	6/27/1998 10:33:00 AM
From: Mazman	Read Replies (1) \| Respond to of 176387

Geoff & Thread, Nice blurbs on Dell workstation shipments and plans to expanded sale of HP printers in Monday's Investor's Business Daily ... Dell to Debut New Servers Powered by Intel's Xeon --------------------------------------------------------------------- The servers and workstations based on Intel's Xeon processor will have special Dell-designed motherboards. They're built better than previous Dell servers and take up less space. More announcements are expected in the coming week, including a deal with Data General to provide server storage systems. Dell has shipped more workstations than all but three vendors after less than a year in the field. Dell Sells High-End Printers From HP for Business Use ------------------------------------------------------------------------ Hewlett-Packard will sell its LaserJet printers through Dell's direct sales channels. Dell has been selling low-end HP printers since '97. Starting June 29, Dell also will sell business printers that cost from $1,000 to $4,000. HP hopes to take advantage of Dell's direct sales force. Dell accounts for less than 5% of HP's total printer sales. Mazman

To: Geoff Nunn who wrote (49181)	6/27/1998 1:01:00 PM
From: Chuzzlewit	Read Replies (2) \| Respond to of 176387

Geoff, I agree with your premise (actually, a substantial amount of evidence supports it) that management acts in its own best interests and that interest is frequently at odds with shareholder interests. And that is exactly the point that I was making when I brought up dilutive mergers. I think you must have misunderstood my post, because we agree entirely on this point. I was not arguing that position as a basis for managers' compensation. I was arguing quite the opposite. But let me expand the argument. Why would company A pay a 35% premium (in stock, of course) to buy company B when no clear synergies are apparent? Answer: top managers at company A get two benefits -- they get to increase the size of their empire (you mentioned this one) and the get to increase the size if their bonuses in spite of the fact that s/h of company A see the price of their stock plummet. They do this because if company B profitable, then the total profit of the combined entity is higher than the profit for company A as a stand alone. They also get to fire a lot of people (shades of Chainsaw Al Dunlap) and increase short term profits. Plus, they seem to always get to reprice their options (as in Seagate). What is the advantage to company B's management? These deals tend to be friendly, so they get top jobs, stock options, an immediate 35% or so bounce in the value of their existing stock. So who gets hurt in this? The shareholders. There have several studies showing that "friendly" acquisitions don't work out nearly as well as hostile acquisitions. I seem to recall one study (I can't remember who did it or when) that suggested that the bulk of friendly acquisitions decreased s/h value compared to holding the two companies as separate entities. ***** To my way of thinking, management compensation should be based in large part on how well shareholders have fared. This implies that management should not be able to extract rewards when shareholders have suffered losses. At the very least that might entail using eps as defined by federal tax codes (instead of GAAP accounting) as a basis for bonuses and issuing only restricted stock. I would also exclude using cost savings from layoffs as a basis for increasing management bonuses (it seems only fair that that bonus should go to the laid off workers). However, I still take exception with your market share analysis. If long term profits are anticipated to decrease as a result of attempts to increase market share I can't see what advantage this offers entrenched management. It ought not to increase the capitalization of the company (unless you buy into sales per share as a basis for corporate valuation). Therefore it seems to me that at best the corporation will be the same size as it was before initiating a price war. TTFN, CTC PS How are you enjoying the heat wave? It's been downright chilly here in the Puget Sound area.