LT,
I've been reading your post for some time and have come to the realization that you are one of the select few on this board who have half a clue about the markets and DELL, specifically. After reading a few hundred posts on the "sacred" DELL thread I have awakened to the fact that this is the most obnoxious, ridiculous, and blind following of the masses that I have ever witnessed.
Now, you DELL longs don't get me wrong, I have gone long on DELL just about as much as I have shorted it, but I watch this thing like a hawk (Both long and short). LT is the best thing that could happen to this thread, as I believe he is much closer to making a killing on this stock than anyone who dares enter this security at its current price without a disciplined exit point. I believe the company has an excellent model (the best), but what most fail to realize is that it takes much more than a good model to sell a commodity. CPQ, HWP, GTW, and IBM are breathing down DELL's neck, and have much greater ability to attack DELL than one would care to believe.
DELL's more difficult year to year comparisons, it's valuation, and the overall weak conditions of the world economy will make it much more difficult for DELL to continue its past growth rate. I remember that about two and one-half years ago you could buy DELL, GTW, and CPQ for a P/E of less than 10. The only difference b/w now and then, is that PC sales growth as an industry has fallen from 25-30% to approximately 11%. Since DELL was growing just as fast a rate back then, I ask "Where's the current value???". What is DELL going to do with all the new and planned manufacturing capacity when the entire industry goes to hell?? Reminds me a lot of MU a few years back (yeah, I know, there are a lot of differences b/w the two, but hopefully you'll get the picture). How 'bout reading post #67331 for more info. regarding overvaluation???
BTW, I agree with LT that things won't start getting ugly for DELL until Q1 of 1999. Sure, this quarter should be great, and the fourth will probably follow, but there is going to be a point where the insatiable demand for commodities like PC's will slow. With greater manufacturing capabilities from all the biggest PC makers, supply will inevitably exceed demand. Not a pretty picture for those that are long on a stock with a P/E of 60 plus. Remember, the market is always at least a few months ahead of any signs of trouble. FWIW, I would suggest thinking twice before buying on the dips.
Good trading/investing,
Tico |
