> Take a look at FedEx..
... information-processing machines like PC's, handhelds,
etc..Well, I am one of the least technically literate here, but I can very well see their complementary nature (winning out)...And most everyone having one (or more) of each....<
John,
Your analogy is incorrect. If Dell's only competition was handhelds and internet devices, I'd be long on Dell bigtime (I have a very short horizon (weeks), and currently I'm slightly bullish after last week's pullback; I'm bearish on Dell for the long haul. The problem for Dell isn't the threat of handhelds and internet devices replacing the PC, it is the other PC manufacturers who are aggressively competing with Dell.
A better analogy is Levi's. Their claim used to be that high-end jeans, with "Levi's quality" (read brand-name) can command a premium. See what's been happening to them. The mass market goes for the cheaper product all the time (actually, Dell's early success was due to this - they were very price competitive).
The problem is that PC's are becoming a commodity. There is no major threat to the PC's from the handhelds, etc in the near term. However, there is tremendous threat to one PC manufacturer from another. And there are way too many of them. I foresee tremendous consolidation in this industry over the next five-to-ten years (just like with TV's and refrigerators and washers and dryers and radios and automobiles and Mainframe, midrange and Unix hardware vendors...).
With commoditization comes lower margins. Therefore, I expect Dell's growth over the next five years to be around 25% CAGR. That is extremely healthy for a company that's Dell's size and, in five years, would make them three times the size they are today. However, it implies PE multiples that are not as lofty as they are today.
BTW John, I don't mind you posting here - I post on both the Dell threads myself <bg>. And we seem to have similar holdings elsewhere (CA still?) <vbg>.
- Brian. |
