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

To: David Harker who wrote (117051)	4/13/1999 2:46:00 PM
From: Chuzzlewit	Read Replies (5) \| Respond to of 176387

David, the following is all conjecture, but it makes a lot of sense to me. I think what we are seeing right now is the put up or shut up part of Gerstner's unstated ultimatum. Gerstner has given the PC division a time frame to prove itself or they are history. Undoubtedly the honchos of the PC division don't want to be jettisoned -- unemployment is no fun. And Gerstner is a savvy CEO. So he has probably negotiated some kind of deal with the PC guys in which there were certain concessions made to them like a more favorable transfer pricing arrangement in return for their acquiescence to the long-run strategy if they could not generate results within a certain period of time. And these guys are probably cutting prices because factory utilization is low. That adds a lot of fixed factory burden on each machine sold. So they figure the trade-off on lowered transfer prices and the decrease in factory overhead would more than compensate for the decrease in gross profit. When Gerstner confronts them with the fact that they cant pull it off there will be a deal inked with Dell. This is just conjecture TTFN, CTC