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Technology Stocks : DELL Bear Thread
DELL 127.96+4.4%1:55 PM EST
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To: Stewart Walton who wrote (1794)9/2/1998 2:51:00 PM
From: The Phoenix  Read Replies (3) of 2578
 
Stewart,

I think DELL's performance has been more than stellar - it's been unbelievable! But, since we're investing for FUTURE growth the question is can they keep growing at 50% when:

1) the market is growing at 20%
2) their revenues are higher - meaning it takes more $ growth to maintain the same % growth

I think the stock valuation assumes that DELL can. I don't believe they can which I why I have reservations.

Next, competition. If we all know the issues DELL competitors are dealing with don't you think the exec's at these companies know as well? And, given that DELL has seen such tremendous growth with unbelieveble margins, don't you think the competitors would like to enjoy the same...as would their investors? I believe that they will try. Some will try unique spins..others may simply seek to replicate. I should point out that these competitors are actively moving in this direction. So, given the first two points I made about revenue growth and slowing market (or growing slower than DELL anyway), layered with competitors migrating to successful approaches I suspect that DELL will have more and more challenges ahead.

To be a bull at even these levels one has to believe:
1) DELL will continue to take market share at faster rates and/or
2) DELL will succeed in new markets where they currently don't exist and
3) Competitors will fail miserably at retooling their distribution models or they will decide that they have no aspirations for increased revenue or earnings.

I think that perhaps #2 is the only thing DELL will succeed at and I don't think this will be enough to fuel the growth neccessary to move this stock much further - LONG Term. I do think DELL will crack another good quarter - perhaps two..but by then market share will be harder to get and competitors will be more able to compete on DELL's "playing field"...maybe they create a playing field of their own...who knows. ;)

OG
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