BGR, I use a regular CAPM model that I've modified slightly. The key is the inputs. I see growth rates sliding and you have obviously missed those announcements. Interest rates are also up a lot, so the valuation of the stock has to be reduced for that. And, of course, Y2K and the fact that they no longer have positive surprises has to increase the beta. I disagree on who pays what to whom when. Dell has run too many receivables dumps to believe that one, and my guess is that the notebook screen people take their money up front now that they have a shortage. And, I don't think we have even scratched the surface of their "contra-revenue" situation, which is different from Compaq's, but, IMHO, still in existence. You need gangbusters growth every quarter to bail that out, and that is a phenomenon of the past.
And who really cares about models. The market has agreed with me since January, which is what really counts. |
