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

To: The Phoenix who wrote (1875)	9/7/1998 1:08:00 PM
From: Geoff Nunn	Read Replies (1) \| Respond to of 2578

Gary, If you wish to criticize my position that's fine - I welcome it. I do wish you wouldn't misrepresent it. 1. I said nothing even remotely suggesting that Intel is running JIT inventory. I was attempting to show only that inventory reduction is not a zero sum game. If a boxmaker like Dell speeds up its inventory velocity, it may facilitate Dell's suppliers speeding up theirs too. We have no grounds for assuming Dell's move toward JIT imposes costs on Intel. One can imagine scenarios in which the opposite is true. 2. The one-day system I assumed for Dell, and which you had so much fun with, was clearly labeled as hypothetical. I never suggested it would work with Intel's fab process. I discussed it only in terms of the effect on Intel's finished goods inventory. I never said it was doable. 3. Now you're smokin somthin. If Intel has 5 customers for which it inventories and each customer typically take 100,000 Pentiums a month then they will inventory for that expectation. If however Intel has 6 customers each of which take 100,000 a month then they will inventory for that expecation.. You're argument is that they will not change their inventory or build practices depending on the inventory, purchasing habits, and volumes of their customers is seriously flawed. That is not what I said. If Intel takes on more customers, its need for inventory probably goes up. However, this is not relevant to the issue. Why? Because the issue with Dell is whether it imposes special costs on Intel due to its frequent inventory turns. The costs you refer to aren't special. In your example each of the 6 boxmakers imposes costs on Intel. When any one of them enters the picture, Intel's need for inventory goes up. I do agree with one thing you said. Frequent inventory turns give Intel no window into its future business. Intel has a formidable problem of forecasting long term demand, along with many other problems. I don't believe I suggested Dell's relationship to Intel provides any panacea.