Does anyone have an opinion on this matter?
Perhaps the decrease in Dell's stock during the last month is more of a forward indication that profit realized in its derivative trading (selling puts on Dell, buying calls on Dell) will be less robust in the future than it has been in the past than it is a slackening of revenue growth or unit sales related to its core business activity.
Just thinking about it, when a company like IBM, fantasizes about doing something with Dell that it doesn't really want to announce at this point, if it were to involve some merger of operations in whatever form, the valuations IMO would probably exclude realized derivative profits as some form of nonrecurring activity.
Although I haven't run the numbers to support this theory, by my way of thinking, if one were to exclude the derivative activity, this would probably be sufficient to depress the price of Dell to where it is currently trading, thereby effectively realigning the price of the stock more closely to the market's perception of the value of Dell's core business operations, which is where you would want it to be if you were in an "aquisitive" mode.
But on the other hand, the recent fall-off in IBM's price could also be suggestive of IBM's expected transfer of all of its white box business to Dell and the uncertainty of how such a move will impact IBM...
So, could others fill in the blanks here? What am I missing?
Mark A. Peterson |
