Ian, yours was one of the more incisive posts I have seen on this thread in some time. The market is manic-depressive, but over the long run sanity prevails. Perhaps the problem is that too many investors were caught up in the hype when Dell ran up from the low 30's to $55 last year.
The things that spell long term success for the company remain, as you pointed out, ... growth rate, net margin or ROIC or any other ratio that matters.
Finally, let me point out that box making is a fiercely competitive industry, and Dell has the best business model in the group, and so I do not fear the likes of CPQ or IBM in this niche. What I do fear is the slowing growth rate due to Dell ever-increasing market share. Recent moves by Dell indicate that management, too, is aware of this potentiality and is addressing the issue. I believe that recent weakness in Dell may be a result of not only the comment by Meredith concerning short-term cost pressures (DRAM pricing), but also a "show me" attitude taken by investors regarding Dell's entrance into new businesses.
TTFN,
CTC |
