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Technology Stocks : Dell Technologies Inc.
DELL 133.20+5.7%Nov 26 3:59 PM EST
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To: Frank Ellis Morris who wrote (131120)6/4/1999 5:50:00 PM
From: Chuzzlewit  Read Replies (3) of 176387
 
Frank, get a grip! What large cap company do you know that is growing sales and earnings at Dell's rate? If you want guaranteed returns buy bonds.

Much of Dell's "problems" are the result of unreasonable expectations from investors with insane views of how the markets work. It is impossible for a stock whose earnings growth is around 40% per year to triple year after year, all other things being equal. It makes no sense. And yet, folks like you are calling for Dell's head because he hasn't pulled off the impossible.

In point of fact, I had some heated arguments with Voltaire over this issue. Every time Dell dropped he claimed that the market was being manipulated. But when Dell was up to around $55 I was hollering to one and all that the price made no sense at all. So who is to blame for the "problem"? Maybe there is no problem other than unrealistic expectations?

If a stock is worth the discounted value of its free cash flows have you thought about what that value might be? I happen to believe that Dell will continue to grow at roughly four times the rate of growth of the average large cap stock, and that at it's forward-looking P/E is trading at less than twice the P/E of those stocks.

Why should Dell have a forward P/E of 100? If you can answer that question without resort to "internuts" maybe you can make a reasonable case for a problem. But I don't think you can.

TTFN,
CTC
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