Sig,
This has been the year of internet, e-commerce , and broadband companies going thru the roof in valuation.
In many cases these company have had a small amount of capital stock and the excessive demand for same. That drives the value of the stock to heights that have nothing to do with the ability of the company to generate take home profits.
IDC and Dataquest forecasts for the PC market have been almost 50% too low despite the relative accuracy of their quarterly reports. Kimberly Alexy has been the closest in predicting DELL's revenues and profits this year but she has under predicted DELL's growth rate while over predicting GTW's growth rate. So how one interprets the reports has varied a great from analyst to analyst although the facts are roughly the same .
DELL has now become a value stock. Currently, value stocks are out of favor. Eventually, there will be a rotation to value. I do not know when. In meantime, I am not sure how many more internet IPO's the market can sustain.<g>
I do not know whether I should go so far as to call this "tullip mania" but in some it defintely is.
Today, Kimberly Alexy dropped DELL as he SBI and picked GTW because she thinks that the Corporate market will be weak in Q4 while the consumer market will be strong. So apparently, she is not buying the DELL story on effects of Y2K. Obviously, this is a Q4 position and will change in Q1.
Q1 is GTW's weakest quarter historically. Now you might that this is contrarian signal from Kimberly since she has been wrong all year long. <g>
The DELL story is that there are some big data centers that are going to do a Y2K freeze and there are other smaller customers who are not. In addition, DELL has said that they have been gearing up consumer and small business operations to pick up the slack this quarter. Now we know that DELL is doing this because they have reported YOY growth of 100% in theat sector of their business.
Kwatinetz (The PC AXE) has said to buy DELL now because when it does go up it will do so in a very quickly and one cannot know exactly when that will be but it will happen in the coming months.
Ashok Kumar has the same advice. Basically, DELL is the PC company to watch as it is now at 80% of the CPQ run rate.
CPQ is in disarray in Europe and has many serious defections.
All of these analysts seem to agree that DELL will have a high flying Q1 and Q2 in FY2001. So we may have a few more months to wait for the DELL train.
Regards,
Jim Kelley |
