edamo, all good points.
Pretty well understood by most now. Dell has outlined
future growth (servers, portables, storage, services),
not too many like the answer because it includes being
one of the most profitable PC makers.
The market wants dell to abandon PC's altogether and
Dell's response is basically 'that's stupid, were
making good money in the business' it just does not
have the growth potential it once had.
Although they are growing enterprise much more rapidly
and reducing PC sales as a % of Revs, PC's will remain
their growth albatross.
The market currently doesn't like this and will not
reward this, maybe anytime soon, maybe never again,
or maybe good times are just around the corner. Who
can predict what the street will value next? In any
event, I'm looking to hear their enterprise story
today.
One thing for certain however, Dell's model makes it
very, very difficult for them to loose money the way
CPQ did in 99 as their cost and inventory structure is
just too lean. That's why I believe they have a
minimum valuation $20-$25 that will be very difficult
take out -- were pretty close if not at the bottom.
Of course, that also depends on the entire market.
Should we continue to revert to the mean where PE's
of 10 - 15 are common once again, Dell would trade
at 1x sales.
The market has changed over the last few years as
you state and perception outweighs actual results.
Investors want the potential of upside surprises and
the possibility of limitless growth (be it real or not)
to get excited about a stock. Once the future is
known, it becomes discounted.
But the market will likely change several more times
throughout the course of my investing career. I can't
say what investors will value next.
The stock will be back, even IBM came back. It took
six years for IBM to go from peak to trough before it
took off. Dell only has 4 more years to go.
Patience<gggg>.
MEATHEAD |
