RE: How about this: Valuation.
No matter how you slice it or dice it - DELL is highly valued with high expectations priced in. And it has been for a long time but they keep on performing and it keeps on being overvalued.
Would you rather your stocks were overvalued or undervalued? I'll take the former please. I have too many undervalued stocks in my portfolio as it is :-)
in a moment of weakness this stock probably tanks 30% in days. This risk alone should make any investor very cautious. It's investors like you, who are complacent and expect DELL to continue as normal, who will get hit the hardest.
I'm not complacent, just because I happen to think its a good idea to invest in a company that makes money and is growing(though I agree that the first time Dell misses, it will get hit bad.)
Besides which Dell could drop 45% and I'd still be up and there is no sign that that moment of weakness is near. Cant say that about CPQ. I'm already down there.
Dell's growth rate should decline.
Sure, eventually, we all agree with that, the question is when? I think it has at least another year, and probably more like 2 or 3. Lot of stuff happening that is going to power the PC market over the next 2 years. And of course, since CPQ is ahead of Dell in sales,its growth rate shoud decline first. SO if that is your argument, you should get out of CPQ.
You talk about servers, Don't think I did? yet is DELL positioned to capture the high-end market that Compaq. HWP, and IBM dominate?
Well, if you define "dominate" as losing money in the high-end PC market, then these three do "dominate". The answer is yes I do see Dell winning. How are HP going to compete? BY selling more at lower prices when they are already making a loss on each PC they sell? Not a good strategy. Dell is positioned by actually making money on its server sales. I'm content to let the others continue to dominate as long as Dell makes money instead.
Certainly as I visit companies, I increasingly see more and more Dell systems.
JoeC |
