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To: BGR who wrote (109306)3/12/1999 6:02:00 PM
From: Kenneth Aird  Read Replies (1) | Respond to of 176387
 
According to "Direct from Dell", the primary benchmark used by Dell internally is Return on Invested Capital (ROIC). How much capital does Dell have invested in Gigabuys? Maybe a few servers and disk drives purchased at cost. Even if it does lower net profit margins, it should help keep ROIC in the stratosphere.

Ken



To: BGR who wrote (109306)3/12/1999 8:34:00 PM
From: Robert Scott Diver  Read Replies (1) | Respond to of 176387
 
Re. <So, if gigabuys.com is a hit that (so it seems to me)

1. Improves the top line
2. Lowers margin
3. Hence impacts bottom line.

Now, DELL probably can take some sort of a hit on the bottom line because of it's efficiency, but is it worth the cost?

-BGR.>

Unless I am missing something, if the top line increases due to added lower margin business, the the bottom line also increases unless something else changes. What am I missing? TIA, Scott




To: BGR who wrote (109306)3/13/1999 8:32:00 AM
From: D. Swiss  Read Replies (2) | Respond to of 176387
 
BGR, Gigabuys.com generates INCREMENTAL top and bottom line revenue with no inventory risk. This is pure leverage play on Dell's internet presence. How can you possibly turn this into a negative? If their margin is lower on that segment of the business it will be disclosed in that manner. You will be able to see the gross margin from the PC business and from this new segment separately.

:o)

Drew