re: You don't realize how many naysayers have shown up on this thread over the past couple of years. All of them would have been better off to just buy & hold & shut up.
I did not show up a couple of years ago.
I showed up in January.
Seeing the Problems at CPQ, the largest box maker there is, I thought that DELL, would start to show signs of the same problems. For thoes of you that don't know, CPQ ran into a demand problem causing the many PC's they had built to satisfy that demand to build up in inventory.
The announced stock split far over road an EPS report that showed declining Margins, and revenue growth that was below Expectations.
Combined with the fact that CPQ was having problems and the constant cheerleading be MSD, and the Market going up @ a 60% annual rate, and manical momentum buyers, The stock has gone crazy.
I was early.
My first comments on DELL were that the Feb report would be good, but there was great risk for the May report.
While it is a forgone conclusion at this point that Unit growth for Q1 will be in the 50-60% Y/Y range, ASP and Margins are where the questions are.
Then they come out with this $500 debt thing.
Semi conductor revenue growth will be in the low single digits in 1998, IDC, I believe, just lowered the number from the teens to below 10%, it will be lowered again. Dell's growth is dependent on Gaining market share, a Stable ASP of about $2200-2400, and a growing PC revenue market.
We know the Market share gains will be there. We know the Unit growth will be there. We know that servers and all the high end will be there.
What we don't know, is if the other 70% of DELL's business has or has not been effected by:
1) The very obvious ASP decline in the past months.
2) The ablity of lower cost machines to competently preform 50-70% of all PC tasks.
3) Their lack of offerings in the lower prices segment.
3a) some would contend that this is not important because it is so small. But after servers, it is one of the hottest growth areas of the PC market. Some argue that these lower cost machines are canabalising higher cost machines, and some say DELL is a genuis for sataying out of the lower priced market alltogeather.
While the stock has surprised me to the upside in years past, This is the first time, since 1992 that I am seeing trouble in PC land.
Time will tell if the great and mighty DELL can avoid the problems of other Box makers, and if they can go unscathed can the avoid the wrath created by those other companies solutions to their problems?
Will slower PC growth revenue have an impact ?
Will they sell Celeron for 20% more than an AMD machine?
Will Merced anticipated glory over ride everything ?
Would a fund manager get fired for selling 1 DELL share?
Will the Dellionairs sell before the top or after ?
Will the stock ever top ?
Will the stock go up forever @ it's current 300% annual rate?
Will DELL ever pay a dividend ? (not!)
Will DELL issue more debt to buy back stock ?
Will DELL find it with over capacity ?
Will DELL be able to sell Merced without a large inhouse service division?
Will DELL ever talk about North American demand in one of their cheerleading reports?
Will anyone care what happens, or will they just Buy more DELL expecting them to rule the world of PC's forever.?
Will the Company ever Fear anything ?
The bottom line of my bear argument against DELL is that it is not different this time. The PC industry, while different in many ways, can not avoid the normal life cycle of any high tech industry.
INTC is at the end of it's life cycle of domination, CPQ has shown sighs of weakness in the PC industry's armor.
The competitors are rushing in with copy cat scheams of DELL.
The Japaniese are ready for a comback to the US desk top market, They will be a more formidable foe the second time around.
I think these are signs the Life cycle of the big money making days of the PC market are coming to a close.
I am just waiting for them to slam the door on DELL.
When the cycle does end, weather today or in 100 years, Dell and many others will end up in the same place, The source of funds list.
Jim
P.S. I know I am going to catch all (&%* for this one, But I had fun writing it. |
