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

To: Mike Van Winkle who wrote (112888)	3/27/1999 5:20:00 PM
From: jim kelley	Read Replies (1) \| Respond to of 176387

Mike This is a new topic it will take a while before all the facts come out and everyone understands the importance of this to DELL's earnings growth. The excitement will come. The tradeoff between sales increase versus pricing aggressiveness is a well known phenomenon in this industry. I do not know what the price elasticity curve is but I am sure that DELL does know. If DELL is successful in decreasing it cost of goods and its SG&A then DELL will be in position to resume its rapid revenue growth without losing earnings growth. These cost reductions can be achieved by the following: Patent Royalty reductions. Reduction in cost of INTC processors due to volume. Reduction in the cost of licensing MSFT software due to volume. Reduction in the costs of monitors and other peripherals as a result of volume. Reductions in other component costs due to volume increases. Reduction in SG&A due to increasing use of the internet and attention to internal cost controls. Currently, CPQ has an advantage in MSFT licensing cost and also in IBM patent royalty costs. These two together could be as much as 2% in DELL's cost structure. MSFT is likely to have to adopt a uniform and fair pricing as part of the settlement with the DOJ. The IBM royalties should should be reduced beginning this quarter. Focused execution is the key for DELL. Regards, Jim Kelley