The latest from Sr. Greenberg at The Street.Com...
Herb Part Two: Dueling Dells -- Now for the Other Side of the Story
By Herb Greenberg
Senior Columnist
5/5/00 8:30 AM ET
Dinging Dell, Redeux: Yesterday, it was longtime bear Bill Fleckenstein with the reason he believes Dell (DELL:Nasdaq - news - boards) is likely to either guide analysts down in expectations of 21 cents per share for the second quarter that ends June 30 -- or simply miss it altogether. That prompted the equally not-shy Michael Murphy, best known for his California Technology Stock Letter, to pass along what he believes to be just the opposite. (This is what he told subscribers to his Technology Investing newsletter, which is diff from the California sheet, when he gave Dell an aggressive recommendation.) If anything, says the Murph, when Dell reports on May 11 for the first quarter, it won't just beat estimates by at least a penny, but will also beat second-quarter estimates -- which Fleck thinks the company will miss by as much as 2 cents.
His reasons: The March quarter grew 15% "even without Win2000. Corporations bought almost nothing before the Win2000 intro because they hate to do OS upgrades." Then there's Europe, "which is exploding right now as sub-$600 PCs catch on for Internet access."
This quarter, he says, the mix shifts to "Win2000 high-end servers, which helps beat the quarter." And "Dell passes Compaq (CPQ:NYSE - news - boards) to become the No. 1 PC supplier this year, perhaps as early as the July Q." Meanwhile, he says, the Street's future growth expectations have been "cranked down to 33% from 50% and that's already in the stock [that] sells for a P/E less than two times its growth rate -- not bad for the No. 1 player in a tech industry."
Even if its growth has slowed and it still trades at 81 times last year's earnings? Nothing like two smart guys disagreeing.
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