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

To: jbn3 who wrote (60317)	8/23/1998 6:25:00 PM
From: JRI	Read Replies (4) \| Respond to of 176387

Bachman- Thanks for the article from the Austin paper last Monday (before earnings).. A few thoughts... (1) As you probably know, CIBC Oppenheimer (Poyner) has consistently been one of the LEAST bullish (of the analysts) following Dell...I believe that their firm has rated Dell a "hold" for most of this year...before this year, I dont know, but I would assume that they have always been somewhat sceptical of Dell's (supposed) advantage(s). They must have done some advising/financing on the DEC merger and/or are chasing CPQ's business in some other way (!) (2) This paragraph stuck out (as well): <<Cody Acree of Southwest Securities in Dallas and Poyner said that analysts will be looking for a drop in Dell's shipments or in its gross profit margin, which Dell has maintained in a narrow range of 21.5 percent to 22.5 percent for nine quarters.>> Either the reporter got this wrong or these analysts are pretty dumb....Assuming the reporter got this right, how could (the analysts) claim that they (potentially) could see a drop in (Dell's) units shipped when the data from IDC and Dataquest (on 2nd Q units shipped) has been out there for several weeks...Granted, Dell reports on a May-July basis (vs. April-June, when IDC/Dataquest data is calculated), but these analysts could backtest the IDC/Dataquest data vs. actual results to determine the accuracy of this forecasting......and they would find that IDC/Dataquest data, if anything, usually understates Dell's units shipped in a quarter (and/or the rate of growth)....To my knowledge, in recent history, there has never been a substantial difference between their figures and Dell ON THE DOWNSIDE..It just seems a bit disingenous to mention a "drop in units" as a potential problem when IDC/Dataquest had Dell units shipped up 74% (for Q2) vs. 66% (for Q1)....To anyone paying attention, it seemed pretty clear that units shipped would not "drop" for Dell in Q2... They are right, of course, on the issue of gross margins.. (3) In closing, after listening to Dell's conference call, I feel confident that neither MD or TM feel threatened by CPQ's "supposedly new" strategy of "supposedly" offering a similiar unit at a lower price....Sounds like CPQ's smoke and mirrors PR to me again, and Oppenheimer is eating it up....In my (only) months of observing Michael Dell, I have never seen him more confident than when discussing the future of the company (during that call)....If Poyner were right (about CPQ aggressively cutting price on new units, and providing a better deal than Dell), I feel certain MD or TM would know about this strategy, its potential impact, and would have provided some guidance to analysts concerning it (if it indeed CPQ's strategy could impact unit growth or margins in any material way) ....I can't see this (issue) as one of those (oops, we got blindsided issues) for TM or MD .. Rudedog sees some potential problems for Dell in this area, but my thought is.....if CPQ (or HP or IBM) could steal business from Dell using this strategy, wouldn't they have done this (by now...or logically, much earlier than now), and/or wouldn't we have seen the effects of such a strategy on the bottom line(s) in the recent 2Q, or much earlier? Until CPQ (or HP or IBM) can prove they can impact Dell's bottom line(s)- without even going into the argument whether or not it makes sense for Dell's competitors to do it-- (with this supposed strategy), I think the smart money has to remain on Dell....