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Strategies & Market Trends : Value Investing
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To: James Clarke who wrote (3479)3/9/1998 12:46:00 AM
From: Michael Burry  Read Replies (2) of 78572
 
You're not missing anything big. Dell's whole edge is its
inventory management, which has allowed it to avoid the inventory
problems of every single other PC manufacturer. It rarely
gets the highest marks for quality, and just as rarely gets
the marks for customer service.

Micron, Gateway and the other direct sellers have to
replicate the inventory system in place at Dell. No simple task,
but doable over the next year or two. And then Dell loses its comparative glow. It will still dominate corporate sales, but it
becomes a widely recognized pure commodity business that is cyclical nonetheless and hence not worth 54 times earnings at the top of its cycle. It seems like an obvious short to me. The last 20-30 points
were all speculators blowing off the top of the stock, IMO.

Mike
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