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

To: arthur pritchard who wrote (149082)	12/11/1999 5:36:00 PM
From: Meathead	Read Replies (1) \| Respond to of 176387

Hello Arthur. Re: the world may be changing Always has and always will. Although the internet revolution with it's flotilla of smart handheld gee whiz techno marvels is just getting underway for the benefit of mankind, I believe that we are in the final stages of a massive wall street speculation bubble. When valuations have no bearing to any reality now or any reality that can be concocted in the future and they've decoupled from any fundamental analysis related to a risk free rate of return, only bad things can happen to share prices when things begin to revert to the mean. It's almost plainly obvious that a wall street prophecy is going to be fullfilled when IPO's race up 900% in a single day and companies with 500M in revenues and 58M in earnings sport a market cap of 92 Billion. It's setting unrealistic expectations in the minds of investors which ultimately can not be sustained. Valuation is not even a remote consideration on the minds of investors or even analysts for that matter who seem to be blinded by greed at the moment. Growth is all that matters. But what is the end game?? General Motors is the end game. Let me explain. Valuation is fairly easy to understand or at least get a handle on. Let's say you (any investor) would like to purchase a business for yourself. You have 92 billion dollars to spend. Would you: a.) Spend half (45B) on a company with annual revenues of 178B and earnings of 6.7B and put the other half in 6% bonds. or..... b.) Spend it all on a company with annual revenues of 500M and earnings of 58M with no idea on ultimately how big the business can become, only that it's growing fast. If it was your money, the answer would be the first option, a no brainer right? Who in their right mind would pick option b? Everybody apparently cause that's what's happening. The situation I've just described pits Yahoo against Genral Motors Corporation. That's right, you can buy GM two times over for what it would cost you to buy YHOO. So what's the end game? What will YHOO be worth if and when it grows to a gargantuan 45B in sales with 5B in earnings and it's growth slows to < 10% someday? It will likely be worth less than it is today. To me, this does not look like any kind of long term investment and spells almost certain disaster for the market at some point in the near future. There's no guarantee that a company who focuses on execution and earnings will always reward shareholders accordingly. What is guaranteed is that they will survive and thrive in the markets they serve and their stock will always be worth something to someone. I "invest" in Dell because I believe they'll be around 10 years from now and likely dominate the hardware business. If I were more of the gambling type and were willing to speculate, Dell would not be a good stock for me as there is more money to be made/lost elsewhere on company's who's futures are much less certain. MEATHEAD