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Politics : Ask Michael Burke -- Ignore unavailable to you. Want to Upgrade?

To: Skeeter Bug who wrote (71043)	11/28/1999 2:23:00 AM
From: Chuzzlewit	Read Replies (2) \| Respond to of 132070

Skeeter, though one could argue that if investing in stock is a better use of cash than building the business... one should be concerned... That's because you fail to appreciate the financial mathematics behind multiyear stock buybacks. They are indistinguishablefrom DRIPS except for the fact that buybacks are tax-advantaged (converting ordinary income [dividends] into capital gains). The other point you fail to appreciate is that Dell has a huge ROIC and phenomenal cash flow. That means that it could fund its hyper-growth internally and still return capital to shareholders. What other company do you know of that can do that? i'm sure dell issued a several hundred million dollar (500?) offering. Well, you're wrong. According to SEC fililings, Dell had 2,540MM shares o/s on July 30, and 2,543MM o/s on January 29, 1999. And on February 1, 1998 there were 2,573 shares o/s. Check it out for yourself at freedgar.com What really bothers me about these kinds of posts is the monumental amount of misinformation glibly passed in these threads. I think the idea behind SI is to pass on useful information, but spreading stuff like this serves nobody. I can understand you not thinking that Dell is a good investment. That may be the result of the price or your reading of the business outlook. Or perhaps you simply don't like growth stocks. All of those reservations are understandable. But why pass on information that is demonstrably false? And when challenged, why do you repeat these baseless comments? Now, if you want to talk about other stocks,I'd be happy to oblige. For example, I am convinced that many stocks on the NASDAQ are set for huge falls. And I'm not talking about the dot coms. I'm talking about good solid companies with good growth prospects. For example, someone asked me to analyze CSCO and I responded that I thought the stock was worth $30 tops. About a year ago CSCO was trading at around $35. If earnings increased by 35% and the window of visibility advanced by one year I would expect that the stock should be trading at around $47. In a rising interest rate environment I would expect a number closer to $45. I have no idea why this company is trading at over $90. Why should its multiple double? And if you think that's outrageous, look at companies like SEBL, JDSU, QCOM, etc. These are solid (albeit risky) companies with prices completely disconnected from reality. If I had the cajones I'd short them all. But this tech market is in one of its manic phases, and there is simply no accounting for the lunacy of speculators who call themselves investors. Maybe I should buy long-term out of the money puts. TTFN, CTC