Mr. A...
You are right about one thing, Dell's stock price is temporarily overvalued and likely due for a moderate correction of 10% to 30%.
Let's face it, a Mkt Cap of 3x sales and a forward PE of 35 has not been bestowed upon any PC maker this decade.. at least I don't remember one.
However, your insights into the dynamics of the PC industry, fundamental growth drivers, sub $1000 PC's and what they mean to the industry, the competitive landscape, Corporate buying practices, Intel's component pricing, etc. etc. etc., are quite inaccurate, seemingly superstitious and likely based on a lack of understanding.
Not your fault however, this is a terribly difficult industry to fully understand. Even pro's like myself who have been working in the industry for the past decade (50/60 hrs a week) strugge to keep up with the changing landscape.
Most investors don't have a clue as to just how powerful and efficient Dell's business model actually is and just how difficult it will be for any competitor to emulate any time soon. Any one who thinks it can be done in 6 to 12 months is truly unknowledgable.
The best time for Dell is over? Hardly. M. Dell panicking over the 1k PC? Are you kidding? Thats a consumer PC, a market Dell doesn't mess with. The 1k Net PC for corporations! Now that's a sweet deal for Dell. Sell 10 Net PC's, sell a server! Cha Ching!
Workstations? They will be just like CPQ/IBM... yes indeed, except they will be: less expensive, more serviceable and scaleable just to name a few improtant differentiators.
I could go on and on, maybe even write a book.
Bottom line Dell is poised to grow like no other 10Billion dollar company in history. At 5% market share in an industry growing at
17% yearly, the growth potential is HUGE. Do the math. The next 5 years is gonna be incredible!
But, stock is due for a tank not because of fundamentals but because of greed, fear and overvaluation. But will it? By how much? Will it be a bloodbath? Anybody who thinks "they know for sure" is smokin crack. Only those who were right in hindsight were lucky.
Cheers, MEATHEAD
P.S. I liked that statement about Dell not being able to get good component prices from Intel. That was hilarious! |
