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

To: Gabriel008 who wrote (112846)	3/27/1999 3:14:00 PM
From: jim kelley	Read Replies (2) \| Respond to of 176387

Gabriel, The royalty and patent cross licensing ordinarily would go into effect at the time the agreement is signed by both parties. Of course, anything could be in the agreement but this is ordinarily the way things are done. DELL also has the ability to wring further COGS concessions from MSFT and its other suppliers. These concessions could total as much as 3-5%. There is also the potential for further reduction in SG&A as a percentage of sales. So DELL could wring as much as 4-6% in cost reductions out of its operating and product costs. This amounts to 4.5 to 9 cents per share and bring DELL's net margin up to 10-11%. However, DELL is more likely to take part of the margin increase and use the rest to undercut the competition prices aggressively in the marketplace. This is really bad news for CPQ, HWP, IBM and the other companies. This would result in capturing more marketshare from everyone including the whitebox manufacturers. It looks like the real issue for DELL now is production capacity. They can not afford to sell more units than they can deliver expeditiously. Anyway it is a good problem for DELL and bad news for the competition. Regards, Jim Kelley