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Technology Stocks : Dell Technologies Inc.
DELL 133.35+0.1%Nov 28 9:30 AM EST
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To: Chuzzlewit who wrote (43301)5/19/1998 3:56:00 PM
From: Ed Zhao  Read Replies (1) of 176387
 
>>I view a company as a black box that spits out cash.<<

DELL spits little or if no cash presently. There're substantial risk (10%????) that it will never spit out much cash in the future.

Obviously, the ability for a company to spit out cash is heavily depend on the management. It should also depend on the kind of business it is in, tangible and intangible asset, etc.

The reason I compare DELL with SONY is that they have many similarities. They're both in semi-commodity business. They both have premium brand name in the respective field. The expected market size of their product is similar.

The difference is that SONY is in a much mature industry. DELL can have higher relative value (higher P/E, P/R, etc). But SONY should have higher absolute value (total market cap), since a company is a mature industry has much less risk of being defeated by the competitors. The future income stream of SONY is much secure than that from DELL.

Since cash flow model involves many valuables in order to derive an absolute value of a company, it's easier to get relative value between different companies, since it illiminated many valuables. Comparing between DELL and SONY, we can conclude either that SONY is incrediblly undervalued, or DELL is incrediblly overvalued.

That was the point I tryed to make.

XZ
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