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

To: The Phoenix who wrote (60527)	8/24/1998 5:48:00 PM
From: Don Martini	Read Replies (1) \| Respond to of 176387

Right, Gary, A direct-selling spinoff by IBM/CPQ will work, if they hire Michael! Don

To: The Phoenix who wrote (60527)	8/24/1998 5:58:00 PM
From: Reginald Middleton	Respond to of 176387

<Well, first it's a bit hard to compare CPQ, IBM, and HP profits against DELL since they compete in so many other markets and may have loses in those markets. DELL is clearly more targeted and focused. My contention is what if one of the above companies decides they are going to do a spin-out or subsidiarize their PC business in order to target the DELL model. If there is something that DELL has that keeps this from happening then there is a barrier to entry... So far I can not see one.> I think the point the thread's positively inclined pundits are trying to make is that although the Dell model is easy to articulate, it appears (at least in reality) to be awfully difficult to replicate. CPQ, IBM, and HP have lesser growth in PC's shipped, lower customer satisfaction rate (according to the previous post's references to the Gartner Group, etc.), decreasing Asian revenues and shipments, higher administration costs, higher cost of goods sold, and more inventory on hand in a volatile market. You can also include the fact that Dell has the highest average selling price for a PC several quarters running. Consistently more revenue on higher margins with lower costs must mean something. These companies cumulatively represent at least a billion dollar effort in trying to dethrone Dell. Thus far it hasn't happened. From a historical perspective, it does appear that Dell benefits from a barrier to entry, although I have not seen it articulated clearly on this thread. As for profits, that idealogy will lead you down the wrong path. Dell and at least the box making components of its competitors are growth companies. Growth companies' investors are not best served by the generation of accounting profits, for they do not further growth, but allow for seepage into taxation, foregone market share and excess oppurtunity costs. I have written much on this topic, I suggest you read the Case Against Earnigns at rcmfinancial.com