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Strategies & Market Trends : Buffettology

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To: jhg_in_kc who wrote (282)	9/21/1998 12:18:00 PM
From: Robert Douglas	Read Replies (1) of 4691

sir, you are wrong about dell. dell is a distribution stock not a computer stock. Dell is indeed a distribution stock and that is precisely the reason to avoid it. Dell's profit margins are too high for a company whose business is that of distribution. The net return-on-sales figure is approaching 8% and is at an unsustainable level. I think a more appropriate level would be around 5% and perhaps much lower. Competition will work its magic on Dell and these margins will not be maintained. I think saying that Dell has barriers to entry is whistling by the graveyard. Sorry to disagree. -Robert

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