<<<<As I see it, the major hurdle (and opportunity) facing Dell is its entrance into new businesses where it can extend its superb business model.>>>>
I think they are doing this with their entry into the storage, and storage area network markets, don't you agree? Both of these are immature markets and both hold tremenous opportunity. I would be concerned if Dell added too much too fast, and compromised execution of either their core or their new businesses.
I also think there is still plenty of room for them to grow organically within their existing markets, at least for the next couple of years. (Meaning sustained growth at around 40%. And I'll take a secure 40% growth in the underlying business any time.) The numbers would seem to support that. Granted, at some point you reach a degree of market penetration where you either enter new markets or accept the industry growth rate. But I think we're at least two or three years away from that kind of constraint, don't you?
There have been a lot of worries expressed on the thread about the stock price and the future of the company. While I certainly understand people's concern over the stock price, I think Dell's action over the past three quarters is neither very surprising nor overly bothersome. The stock was ahead of itself last Jan/Feb, and its been taking a breather ever since. It was the stock of the 90's for heaven's sake, and provided superlative returns to those of us who were smart or lucky enough to stay long. A little patience is in order, I think, until the fundamentals catch up with the price. And I do believe they are catching up. I think Dell will be "fasionable" again soon, and we'll see the PE expansion that we all love so much.
Cheers. |
