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Pastimes : Clown-Free Zone... sorry, no clowns allowed
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To: patron_anejo_por_favor who wrote (105711)5/31/2001 7:22:49 PM
From: craig crawford  Read Replies (1) of 436258
 
I don't see any compelling reason to short DELL. They have gobbs of cash, with practically no debt, and the price war is no secret at this point. Even in the worst PC environment ever DELL still makes a fair amount of money when everyone else loses. What if some other PC companies decide it's just not worth fighting for second place scraps and decides to exit the PC biz? DELL just becomes that much stronger and their stock pops. Also, prices may be coming down in PC's due to a price war, but look at component prices. Memory is super cheap and the war between Intel and AMD is getting pretty brutal as well. So DELL can take advantage of of lower component prices and put the squeeze on the competition. Michael Dell also spoke about a possible replacement cycle coming in early 2002. Interest rate cuts may get the consumer in a spending mood again later in the year or early next year.

Even the chart doesn't look all that bad.

There are a couple of downsides, such as recent signs of weakness in Europe and Asia which was offsetting poor sales in the US, but with the dollar so strong if it backed off a bit that would help as well. Of course if the economy slips deeper into the abyss DELL will probably fall but many other things will do even worse. If the economy makes a comeback it probably won't be the best long either.
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