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

To: Gabriel008 who wrote (108054)	3/8/1999 11:46:00 AM
From: jim kelley	Read Replies (2) \| Respond to of 176387

Gabriel, I suspect IBM is not making much money off its PC box business. Gerstener seems to be running these companies as separate business units and shifting P/L responsibility back to them. "Thrive or die" is a good way to motivate business units. If it can get its components into most of the PC's then its PC business will not matter as much. It makes a lot of sense for them to push their components into broader use in the PC market. They will not feel the margin squeeze that is happening in the PC box business. I think their services business is 25B probably with 30% margin. So they are the king of the computer services. A deal with fast growing DELL could assure the continued growth of their services business. It looks like the immediate benefit of the IBM/DELL agreement is for DELL to take the psychological high ground and to decrease its product costs (via the patent royalty charge reduction). After all if DELL is buying IBM parts then it ordinarily would not pay separately a royalty charge. Another benefit is assured supply of components and increased leverage with INTC. It looks good to me! Regards, Jim Kelley