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Technology Stocks : Dell Technologies Inc.

DELL 133.78

-0.1%

Nov 14 9:30 AM EST

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To: TREND1 who wrote (119223)	4/20/1999 12:39:00 PM
From: Chuzzlewit	Read Replies (1) of 176387

Larry, since you invoked my name, I must respond. There are apparently two issues involved here, but they really boil down to one. First, let's assume a hypothetical company with a steady growth rate of 25%, with $1 in projected earnings, and a stock price of $25. Now assuming that earnings continue at the same rate for the next five years, earnings would be $3.05. Surely you don't mean to imply that the price would not increase substantially (all other things being equal)? Now imagine that all of a sudden the earnings growth rate is anticipated to drop to 20%, so that at the end of 5 years earnings will be $2.49. I think you can see why the price of the stock would drop. All of this has to do with the present value of the future cash flows (I substituted earnings, but the idea is the same). Maybe you should teach HAL about this stuff <VBG> -- I fear he has gotten a one-sided education. TTFN, CTC

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