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Strategies & Market Trends : Buffettology

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To: James Clarke who wrote (757)	12/24/1998 1:10:00 AM
From: Chuzzlewit	Read Replies (1) of 4691

James, let me give you the math. It was estimated by Michael Dell that Dell will have approximately a 20 - 25% market share in five years. IDC and other sources estimate that the computer market is growing at around 15% per annum for the foreseeable future. That means that in five years the total market will be double what it is today. But currently, DELL is only about 8% of the market. That means that Dell will be between 5.0 and 6.25 x as big as it is today. On an annualized basis that implies an annualized growth rate of between 38 - 44% per annum. I use the word conservative for two reasons. First, Michael Dell has consistently underestimated growth, and those projections are his, and second these estimates do not take into account share repurchases which have the effect of significantly boosting eps. In any case, if we agree on methodology, and the disagreement is on assumptions, then we have no real disagreement. TTFN, CTC

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