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Technology Stocks : Dell Technologies Inc.

DELL 120.45

+0.4%

Jan 12 3:59 PM EST

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To: Chuzzlewit who wrote (80233)	11/14/1998 1:11:00 PM
From: Richard Tsang	Read Replies (2) of 176387

CTC, I hope you are right on the inventory issue. I still cannot figure out how they could let A/R go up 3 days. That is closer to 10%. My assumption is DSO (days sales outstanding) is derived from A/R divided by average daily sales in the quarter. Can you help me understand? I tend to agree with you that there should be more disclosure on the employee stock options and the costs in financing these programs. The cost, as I see it, represents the spread between option price and market price on date of exercise (hence the true value to the optionee). It will not become a cost to the company until the company buys them back from market. At the time of buy-back it is an offset in equity account, not reported as expense either. However, on NQO's and disqualified disposition of ISO's these can be reported as income for employee on the W2, and the company is entitled to file for deductibility for corporate income tax purposes, as if there were actual costs incurred. This is probably one of the reasons why both the board and management like so much about the program - very tax effective. I may be off base here as well so correct me if so. I would not put much restriction on legitimate buy-back as it is one of the most tax effective way to maximize shareholder value. However, it does post some concern in Dell's case. You need to continue to buy back 10% of outstanding shares every year to get the 10% premium in reported EPS growth. MD continues to refer earnings growth of 65% instead of the 55%. That is okay as long as this can be executed as flawlessly as the business model. I have to admit that I know so little about Dell. I am in the process of trying to understand it more so I can recommend to our investment club as a candidate in our next meeting. Any more insight you can give will be appreciated. RT

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