Dave:
Would love to get more clarification on a couple things you stated:
"I haven't done a detailed look at DELL in quite a while so I am going on
guestimates. I had computed an end of Calender year 1998 price of about
$95. That was based on about a 45 percent annualized growth rate."
Does 45% mean revenue growth, earnings growth, or EPS growth or something else, like units (obviously, it makes a difference which!)
<<I am
given to understand that DELL hit 65 percent this quarter.>>
The only "official" figures out are preliminary estimates of 2Q demand from IDC and Dataquest concerning 2Q (April-June) units. Dell reports from May-July...so, I'm not sure if you are talking about EPS, revenue, earnings, or units here...
<<However, DELL is in quite a downtrend right now.>> Huh? Dell is down 7.65% from its all-time high (set 3 weeks ago) while the Nasdaq is down 8.8% from its all-time high.....Historically, Dell has outpaced the Nasdaq (to the downside, during a correction) by 2-to-1 or more....most every big name tech stock has been dragged down while the Nasdaq has been going down....Microsoft and Lucent are down even more than Dell (on a % basis)...only Cisco has held up better, and that is because we are a few days away from earnings for Cisco...
So, maybe you are seeing something different from what has already transpired, maybe your comment included your prediction of the future, but, factually, until this point, it is a little hard to say "Dell is in quite a downtrend right now"
Dave S., you did state that you have not been keeping up as much recently, so I'll leave the points at that. I think what many of us longs get frustrated at (when speaking with bears) is that, quite often, what is printed about Dell (by bears) is either nonsense, or utter nonsense...For example, bears who love to state, "Dell, the COMMODITY boxmaker"....it is quite tiring for us bulls to continually post why, although the computer (PC) industry exhibits a (few) of the characteristics of a commodity market, it is fully eroneous to state that PCs are a commodity....Anyone with a little knowledge of business/economics can figure out why.....Such comments serve no purpose, and show a general lack of understanding of this whole process.....I haven't met a bear yet who has ever taken a tour of Dell, CPQ, or others facilities, read the annual report and keep up with articles, reports from Context, IDC, Dataquest......If it were my money on the line, I would. And I do.
So, in summary, I agree with you that the name calling should stop. But I also think that we should quit calling companies "POS" and give some fundamental reasons why we think the company or stock price is in trouble.....
Here is a few reasons why Dell's stock will continue to do well:
(1) There is a major consolidation going on in the PC industry...The big are getting bigger (units) and little PC makers are going out of business....The beneficiaries of this trend are obviously Dell and Compaq, and to a lesser extent, IBM and HP.....I am convinced that Packard-Bell NEC is lost....
(2) Given or taken 2-3% each year, the PC industry is expected to grow around 15% each year....Sure, some years it will be 12%, some years 18%, but most all experts agree with this 15% figure....This is expected to last many years...
(3) Dell has clearly demonstrated the ability to manage consistent and spectacular growth during many quarters of falling ASP's, companies "claiming" they are "selling direct" or going to, computer gluts, Asian crises, etc....I am hard-pressed to come up with a reason why this spectacular growth won't continue for the forseeable future.
(4) On a valuation basis, each quarter, Dell justifies a higher multiple (I certainly hope you are not one of those bears that uses past PE in your calculations of value.....it has been clearly proven over the past few years that by doing so, you would have missed out on the most spectacular stock stories of the last 10 yrs. like Dell, Microsoft, Cisco, AOL, to name a few....It is clear that the market does not value growth companies this way...In fact, the so-called experts at the big brokerage houses often use the forward PE to value companies....or PEG....at around 1, Dell is undervalued compared to other large blue-chip growth companies....I ask you to show me a better prospect based on current stock price and forward growth rates...
OK, Dave, just had to show you that us bulls are not all insults...When you get the time, would love to hear your responses.....Thanks for calling for civility on the thread...It is appreciated.... |
