whipsaw, you've got to use forward p/es for any of this to make sense. Look at it this way: a year ago Dell was selling for around $24. That would have given it a prospective p/e of around 26, which is approximately an earnings yield of 4%. The company looked to grow at around 40%-50% pa and as I recall, the long term yield was around 150 basis points higher than it is now.
Now, we have had approximately 65% y/y eps growth, and the decreasing interest rates would be expected to boost valuations by around 20%, so the combination would combine to increase valuations by around 2.15 times, which would yield a stock price of approximately $51. But Dell is 28% higher because of two other factors: better earnings visibility and decreased perception of risk.
As to my personal perception of the risk, I think the major problem will be market risk, not business risk. I believe that Dell has the soundest business model of any company I have seen. The only business question I have is how Dell can sustain torrid growth by the introduction of new products into new markets. Clearly, at some point Dell's growth will converge with that of the industry, but that will probably be some years off (my guess is 3-5 years).
TTFN,
CTC
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