PX, Enjoyed your comments about Dell. We know that lead time at Dell has dropped like a rock in the Mariannas (sp) Trench. Not surprising given the price war going on, the lack of anything special at the high end, and a glut of higly rated (though low quality relative to other consumer goods) pcs you can carry home today at a very low cost. So often, tech lovers only consider the demand side of the equation and look at sales without looking at margins. This next quarter will probably be the last blowout quarter for Dell. Compaq's price cuts are just too vicious and component prices are no longer dropping faster than pc prices. DRAM is not going to zero, though as an MU bear, I wouldn't mind seeing that. -g- Rapid growth at the high end has already cooled and will cool more as the big boys in that area defend their turf the only way possible, by eating their children before they give up any more market share to the upstarts from Round Rock.
Dell is a good company and their rapid inventory turnover has worked great for them in a market of crashing component prices. But most of the component cos. are drained of their lifeblood already and further drops in price are not likely to lead to even more excessive supplies to pad Dell margins. If this change is actully taking place as I suspect, then Dell is the most overpriced stock in the pc universe. (O.K., other than the fact that Apple still exists at all. -g-) There are only so many Packard-Bells and Apples whose bones you can pick to make your growth. After that meat is digested, you have to go to war with Compaq and Hewlett-Packard, an entirely different type of opponent, and also pretty muscular after feeding on Apple and P-B the way Dell has. Dell may very well win that war, but they will not come out unbloodied. And 47 times nominal eps (remember, reported eps are artificially buoyed by one of the most successful stock buyback schemes in the market) looks pretty hefty to this jaudiced eyes at the start of some nasty action.
Good luck to all (this courtesy stuff is making me nauseous. -g-)
MB |
