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Technology Stocks : Dell Technologies Inc.

DELL 133.78

-0.1%

Nov 14 9:30 AM EST

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To: Satellite Mike who wrote (43092)	5/19/1998 1:26:00 AM
From: Chuzzlewit	Read Replies (1) of 176387

Michael, maybe you should realize that the market values future earnings in determining market capitalization. That's why growth is important. Look at this: suppose HWP grows its earning by 20% per annum, and Dell grows at 50% per annum. In three years' time DELL will have increase its earnings by 228% while HWP will have increased its earnings by about 73%. If you lengthen the growth period to five years, HWP would increase its earnings by 149%, but Dell would have increased by 669%. Now lets suppose, for the sake of argument, that HWP and DELL had identical current earnings per share. Let's further assume that the growth assumptions above are reasonable. Now the question is which stock would you rather own. The answer is obviosly Dell if the share prices are equivalent. So relative to one another, Dell's price would be pushed up and HWP's would be pushed down. So, where would the equilibrium be? What would your guess be? Do you think that maybe Dell should be worth 2.5 times HWP under those circumstances? TTFN, CTC

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