I have some comments people, and please do not bite my head off.
I invested in dell in jan 99m, and managed to get out at a very slight peofit in 2000. I will probably never reenter, for the reasons explained below, or unless Dell "reengineers" itself again in another business (not likely I think)..
Dell is an excellent company, in a very bad industry , approaching saturation and only starting to serve the replacement market.
The "easy" money has been made, and now dell, with it's rich valuation will have to base for a while, in the 40-55 range.
I expect dell not to be "dead money", but the big returns of yesteryear are OVER.
No more momentum driven stock price surges, just slow & steady.
I also do not think will be able to reinvent themselves as a "research-driven" company like SUN/Broadcom/EMC etc. or an "acqisition-" company like Nortel/Cisco.
The P/E will come down, and dell will "grow" into it's valuation for the next 2 years, focusing on sub or near-30% decelerating growth..
While the stock price is lower now, if Dell's guidance is not "cisco-like", and they "make their number" but are low on the top end, watch out below, 35'ish maybe.
1- Bad industry, PC's
2- Decelerating sales growth rates.
3- Not more "earnings" surprises.
4- Never really "exceeds" the top end guidance
and they're are better places to put your money, such as JDSU, EMC, Nortel, Cisco, Broadcom etc.
Just my opinion people, but I hope I am wrong.
A Dell "miss" and the Nasdaq might take another dive, as ridiculous as dell's prospects are to cisco and emc & sun for example.
Have a great day
Jean |
