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

To: stock bull who wrote (50855)	7/13/1998 10:03:00 AM
From: jhg_in_kc	Read Replies (1) \| Respond to of 176387

reasons to hold dell 5 years. This from Chuzzlewit. Says it all. Concise and wise. I pass it on. jhg, I invested in Dell as a solid, long-term hold. I came to see Dell as a unique company. Its singularity is dependant upon a convergence of a number of systemic factors. First, it has a business model that has become the sine qua non of the industry. The efficiency of the distribution model coupled with ultra-tight inventory control has lead to a cash generating machine that boggles the mind! But it is also protected from the entry of imitators because that would require them to jettison their current business practices, and in so doing incur huge losses over several quarters while they attempt to rebuild their credibility. I cannot imagine companies like CPQ, HWP or IBM taking such a radical step. The other source of imitation would be a startup. But here we would be looking at a significant period of time for the new company to build a critical mass before it could be considered a true imitator. Thus, the business model itself provides a barrier to entry. Therefore, I view your question as a hypothetical, and answered in that spirit. My reasoning to your hypothetical is straight forward. Right now DELL enjoys large profit margins and the lions share of a rapidly growing market. But a true imitator would be able to cut into that market and thus we would see prices fall as a result of additional supply as opposed to decreasing costs. Second, Dell's long term growth would be decreased because significant sales would be taken by the competitor. BUT, I view that eventuality as far fetched for the reasons I outlined above. A more likely scenario is that the market would become saturated. Perhaps Moore's law would need to be amended such that the replacement cycle was significantly lengthened, and the increase in demand for existing technology abated. This is the argument that Jim Patterson has been making -- basically who needs a 400 MHz Pentium II? Frankly, I don't see signs of this happening, nor can I imagine it happening any time soon. I guess what I'm saying is that I can't imagine not holding Dell for at least the next five years. TTFN, CTC Next Dell (NASDAQ: DELL)Time: 9:43AMLast Trade 102 5/8Change + 1 13/16 (+1.80%)Bid 102 9/16Ask 102 5/8Volume 01,493,9000Prev.Close 100 13/16Open 101 11/16Day Range 101 9/16 - 102 7/8Last Tick