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

To: Frank Ellis Morris who wrote (112831)	3/27/1999 10:58:00 AM
From: PAL	Read Replies (2) \| Respond to of 176387

New computer buyers are not familiar with quality but only cost conscience. What is your take on this argument and how it may affect Dell??? Hi Frank: As an investor in Dell, I am an optimist as well as a realist. My optimisim about Dell is facing attacks from this low priced computers tems from the notion that SOME segment of those first time buyers will not buy Dell anyway because of the price, these people will probably buy an older model or a used one. So, in segment of the market, Dell is not suffering. Then there is another segment of the market who would buy Celeron type of computers. The price keeps going down. But have you noticed that the highest priced of Dell (P3/500MHz) is $ 1,999. Compare that to a few months ago. I paid P2/450MHz around $ 2,600 just not long ago. And Celeron is now $ 999. In this segment of the market Dell is not that far off from that $ 600 computers because Dell includes monitor and better quality accessories. The $ 120B PC market is divided roughly into thirds: small business, big business and home market, each buy about a third of the 100 million PC shipped each year (source: IBD). Dell's emphasis is in the small and business markets, so that the home market portion is not that significant. Out of the 10 largest PC makers, only Dell sticks with Intel, the rest started using AMD and Cyrix. Now, you can only cut so much of your margin to stay in business (unless the company is Amazon.com). CPQ's revenue growth is from DEC and the growth from its own opeartion is minimal. There will be carcasses of PC manufacturers a few years from now since they just cannot survive cannibalizing the price just to gain market share. Dell will remain as one of the last company standing, and the prospect of Dell taking over IBM's PC is still speculated. Even with the 16B arrangement with big blue, Dell already cut COGS by about $ 20/unit. The realist in me says that Dell will grow, but not like the past 7 years. As Kevin said: there is physical limitations. In the future Dell will not split 7 times in 7 years, mathematically it is not realistic. Dell will be a KING and fine company, and the concept of Dell is the next Dell is that compared to other companies, Dell is head and shoulder above. The question is that while in a limbo mode, what do you do with Dell. I do trade the option as additional income (I recently bought Dell May37 1/2 calls), and I expect that Dell will be at least 45 approaching May's earnings (sans Dan Niles). Paul