Geoff: Interestingly enough, many investors who held onto their investment while the tulip industry "shares" cratered eventually made back their money, although in certain instances it took centuries. The better analogy to the Internet craze that began four years ago is the California Gold Rush. Any basket of Internet related stocks (such as MSFT, INTC NSCP, IOM, YHOO AOL BRCM etc) will over a ten year period yield enormous profits. All one needed to do was "Go West".
Nevertheless, it is doubtful that there is any new institutional money going into Dell at these valuations, and while there are a number of institutions that have publicly avowed to hold onto the vast majority of their Dell Shares, many have also mentioned taking a little bit of money off of the table.
I am well aware that Dell has a better product (including great service)in its field, but it is not so easily distinguishable from other similar products, since the core ingredients are made by companies other than Dell. This relegates Dell to three areas of expertise--assemblage, service, and marketing. And being the leader in PC sales over the Internet is a lot like being the leader in selling hamburgers to a growing suburban America in the '50s. But, no matter how you look at it, Dell does not have proprietary intellectual capital for its product as currently does Microsoft.
I am not suggesting that Dell is terribly overvalued like YHOO or its brethren. I am simply stating that Dell is overvalued going forward--that it's days of tripling every year are over, and that a more reasonable valuation would now put this truly wonderful company at 45.The time to look elsewhere for the nimble investor has come. |
