<<I don't see any compelling reason to short DELL>>
Dell has a PE over 30, with flat to negative growth projected for this year. This year's earnings growth prospects are largely contingent on accelerating sales overseas. This will not happen courtesy of softness in Europe and Japan, in part due to the strength of the dollar. Their base product that is rapidly being commoditized, in an industry with few barriers to entry. Margins will evaporate. The server market, that they are relying on for future growth, is stagnant at best (look under Microsystems, Sun). I don't disagree that their balance sheet is debt free, or that they have cash on hand to survive several years of stagnation. In a typical bear market, for a no-growth company, that (cash) helps establish a floor value for the stock, somewhere in book value territory (seems fair for Dell, since they have next to no proprietary tech to pull themselves out of the downward spiral). Dell's book is between 2 and 3 bucks a share.
I initially put the trade on at 27 with a stop over the 50 dy MA (now its been moved to break even).
Oh yeah, and they're putting in the finishing touches on a head and shoulders on the dailies, with a rising neckline now at 23 that measures to 15 or so if it goes...
I wouldn't quibble if you said GTW was a better short candidate, but they both are outstanding in their own way...<G>
EDIT: BTW, nice new thread concept:
Subject 51271
Regards
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