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

To: Geoff Nunn who wrote (1864)	9/6/1998 11:10:00 AM
From: The Phoenix	Read Replies (1) \| Respond to of 2578

Pricing - interesting discussion. Let me propose a scenario. CPQ purchases inventory at x price. DELL purchases as it needs it...and prices drop. These prices are known (and they are - believe me). Don't you think CPQ goes back to INTC an ask for price protection for their inventory? A few years ago INTC might have laughed in their faces, but with renewed competition from AMD, and Cyrix don't you think INTC would want to keep CPQ happy - the company that bulks up on inventory allowing INTC to better predict it's run rates. It seems to me that of the two companies DELL, and CPQ, INTC would prefer the style of business done by CPQ because the inventory flows are predictable. Given this INTC, when asked, MUST provide some sort of price protection... No? OG

To: Geoff Nunn who wrote (1864)	9/6/1998 12:06:00 PM
From: jim kelley	Respond to of 2578

Geoff, I do not have to have knowledge of that level of detail to assert that CPQ has been sitting on large amounts of inventory during price drops. They have spent the better part of three quarters sitting on excess inventory. For the last quarter CPQ has been trying to reduce channel inventories even though they still have a large amount of internal inventory. While this has been going on, INTC has been reducing its prices every quarter. I do not have access to DELL or CPQ's contractual terms with INTC so I am commenting from the outside on the facts that are apparent. None of us seem to have access to the contractual and price information needed to pin this matter down. So all these comments should be taken from the point of view of plausible inference based on known facts.