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Technology Stocks : Compaq
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To: John Koligman who wrote (10165)12/4/1997 10:18:00 PM
From: g_m10  Read Replies (3) of 97611
 
anybody notice that Dell's price action is doing much better lately

I too noticed that on the every down day on the Street DELL loses less and on the every up day DELL gains more. They still follow the same pattern, but not joint in hip any more.

Or could it be something else, hopefully not something BAD!!!

Now and than I can read that someone calls DELL a screwdriver shop. More than few times on this thread DELL was advised what to do to avoid coming disaster and it's assumed that DELL hasn't realized anything yet. In the mean time DELL's price keeps outperforming CPQ. And there is nothing wrong with CPQ. For some reasons street gives DELL higher multiples. The Best example of it the last Q. For almost identical earnings CPQ is still hovering around $60 while DELL is $90+.
What if M. Dell can see something that we can't. One thing that I may think of he is not pushing leading edges. He is following those edges and steps in when major problems has already been bugged out by someone else and market is ready and wants to buy. He is not making modems, motherboards, etc. M. Dell just cherry pickking. Besides saving lots of resources, this business model is much simpler to evaluate and the Street builds smaller risk factor in P/E. As long as DELL stays away from leading edges, while close enough, and doesn't spread too thin, they may always command hihger P/E than CPQ.
Just MHO.
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