re : <<What would make you think positively about Dell the company? What would temper your views about DELL the stock? >>>
Paul,
I think DELL is a great Company. Well run, Good products, Good value, but you have to pay shipping and handling.
Strong growth etc... I really have nothing against the company; it is the stock that bothers me.
I think the stock is in a loose, loose, or break even position. The Stock has discounted just about every good thing that could happen for DELL. Granted I thought these 20 points ago, but the valuation has just gotten that much more out of whack IMO.
DELL has a great model. That is an undisputed fact. But when push comes to shove, is a great model worth 45 times earnings? Dell the company is only a part assembler. Take that into the stock and look at the valuation. Part assemblers do not disserve astronomical Ratios. PC are just as much a commodity as the chips that go into them.
Loose one, CPQ's actions accelerate price drops industry wide that is already above the historic high rate of change, or it is the first sign of a structural change in demand.
Loose Two, DELL is missing the lower priced market completely. If Business like consumers decide they like the idea of sub Z's, Dell is left missing a growing part of the market to the expense of the $2000 range.
Break even. If DELL has no problem and keeps the growth on track, the stock has discounted it. 3-4 analyst have price targets below the current price because of this. This does not mean the stock cannot go sideways for 1-2 years then move higher after earnings catch up to the stock price.
DELL has the same market cap as CPQ who has 2x the market.
Market mania can drive the stock much higher, but it is only the mania driving it. That is not what makes sustained advances hold.
I hope this answers your question.
Jim |
