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Technology Stocks : DELL Bear Thread

DELL 134.50

+0.4%

1:42 PM EST

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To: JRI who wrote (1436)	8/5/1998 10:55:00 AM
From: Lucretius	Read Replies (2) of 2578

Back to our commodity discussion: IMO PC's are a commodity and are moving more and more towards it. PC's are plastic boxes w/ chips. If I handed you a spreadsheet that was printed out from a PC, would you know which brand PC it came from? Would one be faster than the other in performing the task if they both had the same processor? Tires have different service plans and look different, but they're rubber w/ treads. They are basically a commodity. So, likewise PC's are fast apporaching that level. Many claim that PC's aren't a commodity becuase of differences in service when there are problems. while this might be true now, as I think prices will continue to drop and computers become cheaper and cheaper (much like calculators in the 70's and calculators now) businesses and individuals will simply toss them in the trash and buy a new one if probelms arise later on in the product's life. ie-- service will not be a big issue. As techniology moves ever forward, PC manufacturing will become more and more automated (much like cars) and they will be spit out of assembly lines like coke is spewed into cans. Prices will plummet. competition is a killer. People will buy the lowest cost machine (perhaps those w/ the prettiest plastic box design will benefit somewhat but not in any meaningful price difference) DELL is no longer the low cost producer and will continue not to be as CPQ ,IBM, etc. (the list is miles long) and even local producers like my Grandma spit out PC's at cheapoer and cheaper prices. DELL will still be here, but it will receive a PE of around 10x like other PC makers. This is coming. At 80x earnings DELL has made you alot of money at the great expense of fools that will hold this stock till they die (the "you can have my DELL when youi pry it from my cold dead hands" type investor) Best to exit and take advantage of thesse suckers while you still can. At some point, even these individuals will sell out. DELL L-T looks to be about a $20 (or lower) stock w/ the current shares outstanding and assuming a top of the econmic cycle situation. PC stock prices will of course drop further as we enter a recession. All of this assumes that some really smart kid Teddy Gates doesn't invent a new machine that replaces the PC of course (which is HIGHLY likely if you look at history). -Lucretius

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