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Technology Stocks : Dell Technologies Inc.

DELL 114.48

-3.4%

3:59 PM EST

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To: Lucretius who wrote (64371)	9/9/1998 12:54:00 PM
From: Chuzzlewit	Read Replies (2) of 176388

Lucretius, you have told us that there are three reasons for Dell to descend: 1. We are entering a global depression; 2. Dell's margins will be squeezed as a result of lowered ASPs; 3. Dell is overvalued. Obviously, the first two comments are predictive in nature and cannot be verified until after the fact. But the final reason, overvaluation, is subject to analysis. Any valuation scheme is based on certain premises and an analytical framework for those premises to take quantitative form. So I challenge you to lay out exactly what parameters you use to arrive at the overvaluation conclusion. Now your Honda Accord example is easy to answer -- there are comparable automobiles produced by Toyota and Nissan. But comparables don't work so easily in the stock market because there are no computer manufacturers with comparable numbers to Dell. Dell's unit sales growth is much faster, manufacturing and cash efficiency much greater, and profitability much higher than the competition. So what valuation model do you use? TTFN, CTC

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