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Technology Stocks : Dell Technologies Inc. -- Ignore unavailable to you. Want to Upgrade?

To: Sig who wrote (140854)	8/28/1999 9:52:00 AM
From: Craig Lieberman	Read Replies (2) \| Respond to of 176387

...could be eliminated by Dell investment of a portion of the $4 bil assets in stock of a growing company like Msft, Intc, Qcom I believe that the best investment DELL can make with their 4 billion is invest in DELL shares which would be an expansion of their share buyback. I suppose that this would make the P/E issue worse, not better. Wouldn't it make a strong statement about what the best investment is for the company? Separate topic... Will DELL acquire NTAP to go into the storage arena or just continue the partnership with them? Craig

To: Sig who wrote (140854)	8/28/1999 12:30:00 PM
From: Mike Van Winkle	Respond to of 176387

re: Fool article "This article should be saved by every DELL shareholder...An outstanding article which portrays the DELL direct model as unstoppable," Kemble. "Provides a clarification of why Dell did not buy a service org., in that Dell, while reducing the cost of P/C ownership, would be trying to reduce the amount a company has to pay for services, not increase it," Sig. Valuing Dell has become difficult for me as an investor because Dell's cause of success is new, and even its competitors aren't really getting the concepts right, try as they may. Digesting the Fool article helps in explaining the difficulty in my valuing effort, but I am still looking for quantitative help in valuing Dell. For instance, from the article: What Dell is doing here, though, is seeing a model where every PC can be a managed PC with many helpdesk support functions moving out of the field and out of a company and into Dell. Once again, Dell is reducing cost and profit layers between the original equipment manufacturer (OEM) and the customer, giving back most of that to the customer in terms of lowering PC lifecycle acquisition and operating costs, and keeping some of that for Dell and its shareholders. What's interesting here, financially, is that it can probably do so without investing tons of additional capital in the business to do so. This once again fulfills my thesis that Dell takes a number of different business models -- 1.) Precision manufacturer, 2.) Service, 3.) Distributor, and 4.) Retailer -- and combines them within one organization, generating four levels of profits out of an invested capital base no bigger than any one of these business models might need on its own. That, in my mind, explains the phenomenally high return on capital the company generates.... How an investor wants to build these into their model of valuing Dell, Gateway, Compaq, IBM, H-P, and others is entirely up to them. I'll say this, though: I don't really get how some of the multimillion sell-side guys can look at Compaq, build in the cost-saves from the continued restructurings, and slap a market multiple on it to get a price target. That's about the last thing that's going to get you to figuring out the intrinsic value of a company. If you're not thinking about how well and how willing a company is equipped to deal with the evolution of manufacturing, distribution, and service models and the implications those have on the cost of ownership for the customer, you'll get a better answer on things. The financial metrics -- return on capital, capital build on so forth -- are pretty straightforward. You have to be blind not to see the financial results for the direct PC companies. This isn't a P/E-to-growth rate sort of problem and it's not a P/E-to-market or P/E-to-peers sort of proposition. It's a strategy question and the financial results will flow from there. Fool article link: fool.com