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

To: Chuzzlewit who wrote (50068)	7/7/1998 10:59:00 PM
From: stock bull	Read Replies (1) \| Respond to of 176387

Chuzzlewit, regarding ASP's, I think you need to view the decline in terms of what the analyst's think. I fully understand you comments and they are correct. However, the analysts have a major voice in how well the stock performs, or doesn't perform. So, I guess they get the final vote on the importance of the ASP's. Stock Bull

To: Chuzzlewit who wrote (50068)	7/8/1998 1:35:00 AM
From: rudedog	Respond to of 176387

Chuz - It seems obvious that if a company maintains revenue growth and margin then ASPs are immaterial. I continue to believe that ASP is a measure of performance (an output) and not a driver. It's hard for me to imagine a sensible business plan where management sits around saying 'how can we drive up ASPs?' The method to increase ASPs is straightforward - maintain current practice on high ticket items and increase pricing on low ticket items. Either the sales of the low ticket items will decrease (bad business but increases ASP) or the revenue from the increased low ticket items will offset any decline in volume (probably OK for business and increases ASP). In either case ASPs can be controlled but it has little to do with a sensible plan to grow the company or increase earnings. I do agree with LoD that there is worthwhile analysis which includes ASP as a factor, especially overall industry ASP in very specific categories. But Dell's practice has been to avoid product categories where the margins don't meet their goals. At the moment this includes the sub-1K market. But if Dell figured out how to make 25% margins on a $700 computer, and sold a boatload of them, it would surely drop ASPs a lot but given that they have no current presence in that market, it would probably all be gravy and rich gravy at that. I have not been able to dream up a similar scenario where falling ASPs signal a problem for Dell. It seems like they could move away from a market where margins are too low as quickly and easily as they can move into one where margins are high. There are plenty of plays in the current market which are just below Dell's margin targets (or at least their historical margins) which they could easily mine, if one of the current lines dropped a couple of points in GM. They just have too little inertia to be pinned by something as slow moving as an industry segment pricing shift.