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Technology Stocks : Dell Technologies Inc.
DELL 126.03-0.9%2:26 PM EST
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To: Gabriel008 who wrote (63894)9/6/1998 11:53:00 AM
From: jim kelley  Read Replies (1) of 176387
 
Gabriel,

Bob Brinker bought into the argument that Baron's put out on DELL.
His comment was that DELL was trading at a very high multiple of book value. I think that he did not put much thought into his comment. If you hold DELL stock the stock buy back becomes a tax deferred dividend. Why a company should hold onto cash or buy plant and building in order to increase book value?? Seems dumb to me!

If you buy into the book value argument, then you should dump MSFT and CSCO too. Companies like INTC need to invest in expensive plant and equipment to do their business. Companies like MSFT do not need expensive factories they need test facilities, office and lab space. These are a lot less expensive than a semiconductor foundry. DELL needs office space and factory space. Fortunately, it does not need warehouse space like CPQ, etc.

Here are some comparisons:

Comp.------------P/E--------P/sales--------P/Book-----PEG

CPQ----------69.0---------1.99------------4.87-----------NC
GTW---------21.7--------1.07-------------6.66-----------.72
DELL--------54.5---------4.61------------49.14----------1.0

CSCO-------40.9--------10.94------------14.66--------0.4
INTC--------25.5---------5.35-------------6.05----------NC
MSFT-------45.6--------16.44------------17.38--------0.8

GE-----------27.1---------2.62-------------6.94-----------2.0
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