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

To: Mohan Marette who wrote (50712)	7/14/1998 3:39:00 PM
From: Jim Patterson	Read Replies (1) \| Respond to of 176387

OK, here it is, How DELL gets themselves into hot water. Now you have to think this on a much broader scale than what I am going to explain. I am just using a very small example to illustrate the point. INTC is cutting workers and capacity because they have very little visibility for future orders and turns business. INTC likes having big back logs so they can run their fabs at an optimal rate. Starting just the right number of waffers for each product at the right time. They don't have this now. At some point going forward they will get it back. When that happens, PC parts may rise in price, they may resort to allocation of the most popular parts. Now to make this really convincing I would have to know the true workings of DELL's part order agreements. I don't think any one really knows that. But, INTC does not like JIT. It makes them have to forcast and the less of forcasting you have to do, the less likely you will be wrong. What happens to DELL if Chips are allocated. INTC is always going to fill the biggest orders first right ? that would be CPQ who does not mind inventory. Perhaps IBM and HWP as they will carry the inventory too. That could leave DELL with out parts needed to deliver orders. Now suddenly dells quick delivery is in jepordy. Suddenly DELL has to carry more inventory not less. Suddenly all of the things that make DELL work in a period of falling prices and great parts supply reverses. I wonder what the negative leverage could be. This is not a situation that would last a long period of time. This is not a situation that would damage DELL the company in the long run. This is a sutiation that could damage the perfect reputation of DELL and that would be tough on the stock price. Jim