Dave s.
It's hard to discuss a stock without understanding one's horizon.
I have holdings in Dell short term for which I care what will happen to stock in 6-12 months. I also have longer term holdings with a horizon in the 1-3 year time frame.
What I do not care about is daytrading. Anyone that thinks they can predict the action of any stock on any day or month is foolish. If I want to gamble, I will do it a craps table and get free drinks and plenty of cigars!
I did want to make some brief comments about your top three reasons you are bearish, good thinking on your part, but perhaps you should consider my remarks below under each of your top 3.
I challenge all of you "BEARS" on this thread to engage. I am ready to debate each of you and will leave the personal attacks and jibberish behind. Just do as dave has done and send me your top 3 reasons for concern on Dells stock!!!!!! if I can't address each of your concerns I will sell my short term holdings. If I can the I will post my top three reasons for being bullish. fair?
Jason
- Seasonal weakness for the PC industry after the Year-end season
Remember that 90% of Dell's sales are to large organizations, only 10% of their sales are to consumers. What seasonaility are you talking about, the corp market place is booming, and the govt and education markets are also quite robust and in full season
- Inventory supply gluts in just about all manufacturers supply chains
translating into a vicious price war which we are seeing the early
stages of. Both in PCs and servers. I have tried to provide the
data to support this opinion in my posts. I suggest that you go back
and read them.
CPQ/IBM/HP have over 300,000 MMX units in the channel, and yes there will be serious fire sales on this technology. With Intel's Deuschettes coming out, most large corps (i.e. dell's primary marketplace) have already transtioned to PII and will stay there are go to deushuttes, very few will stay on MMX. IBM/CPQ/HP are hosed, dell escapes this mess becuase of no inventory. So yes there will be a price war but not on the products/customers that dell sells to!
As far price on servers, this plays right into Dell's model and will only accelerate their rampage on this market. CPQ will be the big loser here, as they have built their busy on the fat margin from their servers sales. those days are over. Dell will leverage that to the benfit of their customers and shareholders
- Difficulty in supporting a P/E of 50+ with a market that grows about
15 percent a year in light of the above circumstances
Dell has a historical growth rate of 50%. Mgmt has communicated nothing that would lead investors to believe this will change
There is no segment that Dell competes in that they are not growing at a minimum of 3-4X the market rate. Their server and workstation business is growing at close to 10-15X the market. I think Asia/Japan is the same. Europe is heating up and Dell will get their unfare share of that market as well.
Tough to valuate a company that continues to grow at 50%, has ROIC of 200%+, throws off $200-400MM of cash from ops per quarter after buying back $300MM of stock, and is in a leadership position in almost every market it competes. This a different duck, Plus your 50PE is using histotical earnings, what is your PE estimate for their 98 or 99? |
