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

To: Sr K who wrote (147602)	11/18/1999 4:20:00 AM
From: Don Edgerton	Read Replies (3) \| Respond to of 176387

Dell takes it in the shorts because INTC can't increase supplies to addtional customers. Looks to me as if supply constraints will support/stabilize selling prices and since DELL has been the most loyal and fastest growing INTC customer, it should get head of the line privileges. White box suppliers get the short end. INTC essentially reeaffirmed that it will meet the numbers though perhaps not exceed them and ML's Joe Osha is out to lunch regarding next year. When MD was asked about using non INTC chips during the conference call, he seemed for the first time to equivocate. Could be that the Nashville line could have an AMD line in it without disrupting logistics too much. DELL PE 1/2 SUNW with 2X the revenue growth. DELL PE less than GTW on forward looking profits. DELL selling $35 million a day on the WEB. More in a month than almost all of the other e-tailers in a year. There is something wrong with this picture? Maybe DELL needs to say it will give away PCs and forego profits to build its customer base and brand identity or auction them all through Priceline. With the auction format, it can do away with an expensive sales force and run deeper losses. The above actions should quickly propel the stock to $400 per share as losses surpass $2.00 per share.

To: Sr K who wrote (147602)	11/18/1999 9:11:00 AM
From: Chuzzlewit	Read Replies (1) \| Respond to of 176387

Sr K, Dell's cash flow statements actually show a significant benefit (from tax savings) from the exercise of stock options, so the distortion is exaggerated. Yes -- they book the benefit (taxes) but not the cost! Unfortunately, virtually all companies play this game with the notable exception of Warren Buffet; when he buys a company he ends executive stock compensation plans. Later on today I will put up my cash flow numbers on the LU thread (after putting on my crash helmet). The problem the LU is that internal management stinks! They have high inventory levels and high A/R. I don't care how good your profitability is if you are unable to manage your financial resources you cannot grow without recourse to outside sources of cash. By contrast, DELL is excedingly efficient, and that's why it has such a high ROIC. And that, by the way, is the reason I argue against the write-offs. How can you calculate a meaningful ROIC if you cannot calculate the real capital base? TYC is another story. There is very strong operating cash flow at TYC, and as more buy side analysts discover this I expect the stock will soon be back to its old highs. For analytical purposes I have nothing against the one time write-off regardless of whether it's done an a cash or equity basis. If the acquisition is on an equity basis I treat it as if it were cash followed by issuance of stock. But reporting income before these onetime expenses is just plain wrong. But "reserves" are another matter altogether. In cash flow analysis reserves do not exist! So what I end up with are two time series: the first is operating cash flow, and the second is free cash flow. My approach is to treat a company's accounting like a kids cigar box accounting for a lemonade stand. You are doing well when there is more cash in the box at the end of the day than the beginning. I used to tell my clients: "You don't pay your bills with earnings. You pay them with cash." TTFN, CTC