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Technology Stocks : DELL Bear Thread -- Ignore unavailable to you. Want to Upgrade?

To: rudedog who wrote (1788)	9/2/1998 10:32:00 PM
From: Bilow	Respond to of 2578

Hi rudedog; Great explanation regarding JIT's effects on parts costs. Of course, CPQ doesn't get all its inventory shipped in a single lump. But they agree to take it with a long lead time, and longer lead times always means cheaper prices. Easier planning for INTC. -- Carl

To: rudedog who wrote (1788)	9/3/1998 7:02:00 AM
From: Geoff Nunn	Read Replies (1) \| Respond to of 2578

Rudedog, my problem is this. I'm having difficulty understanding why it is Dell's JIT inventory system imposes special costs on Intel. You have stated that it is because Dell's order flow is not as predictable as CPQ's, and that CPQ helps Intel's mfg process by providing specific manufacturing targets well into the future and takes delivery when they say they will. The operative word here is targets as opposed to commitments. Dell does not make advanced commitments on purchases from Intel but neither does CPQ, does it? Just like Dell, it buys from Intel in the the "spot" market. Is that right? Therefore, I don't understand your statement that CPQ "takes delivery when they say they will" (unlike Dell). I wish you could go into a little more detail about CPQ's relationship with Intel and how it differs from Dell's. I don't doubt that CPQ works with Intel by providing specific manufacturing targets well into the future, but believe Dell also does this as well. Geoff