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Technology Stocks : Dell Technologies Inc.

DELL 135.98

+3.0%

3:59 PM EST

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To: Satellite Mike who wrote (43096)	5/19/1998 2:09:00 AM
From: Chuzzlewit	Read Replies (1) of 176387

Michael, I think you've answered your own questions. Cash positions ought to be as low as possible, because that is one hallmark of a well-managed company. Cash is a useless asset by itself. Cash is only useful if it is invested. So companies that require large amounts of cash for day to day operations are relatively inefficient. So looking at cash is a good way to delude yourself, unless you are a corporate M&A specialist and see large amounts of cash for the taking. The real story in evaluating this company is growth in free cash flows, and this company is a textbook example of how to do it. That's why it is so richly valued. For a real eye opener, look at IBM's top-line growth (sales) and compare that to Dell's. You see, much of IBM's earnings growth has not come from increased sales, but in internal cost savings. Now compare that to DELL, and you will see the opposite picture. Why is this important? Because there is a limit to how much cost you can cut, but where is the limit on how many boxes you can sell? TTFN, CTC

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