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

To: Meathead who wrote (149094)	12/11/1999 9:28:00 PM
From: JRI	Read Replies (1) \| Respond to of 176387

Thanks Meathead....as always, your logic is impeccable...I would only take issue with one characterization....I would agree that the PC market is mostly out-of-vogue at the moment...but I think server/storage is still viewed favorably...and certain companies have been rewarded as the "winners" in the space: server (Sun), storage (EMC, NTAP).....Although I think Sun is a bit pricey now (for expected growth).......Storage is seen to have exploding growth rates over the next many years.....and the market "gets it".....(like B2B and wireless)...however, I believe the one issue I hold (EMC) is on the road to gorilla(dum), still has significant appreciation to go, is still (relative to other dominant tech companies) cheap (hard to use that word in this market).........and actually makes money <G>. Sorry for the blatant plug. So I think it will hold up better when the mania-hits-the-fan...although, of course, it too will sell off....But nothing like some of these other guys.. Probably correctly, Dell's foray into storage is seen as a work-in-progress (can't blame the market for that), and the market has given Dell little credit for its efforts (so far).......but I think the market does underestimate the power/logic of your argument about Dell's gains in PC/Server coming due to the exit of key competitors......also, we've all seen (and been amazed) at how Dell can enter tangent markets (server, workstations), and after some apprenticeship time...rip it up......the foray into storage will be harder than server/workstation, IMO.....and will take longer (with Dell being a smaller player)...but I expect after a while, Dell will make significant progress there too..... ..I would agree that we have been bombarded by reports of the downside of a competitive market coming to a head (cutthroat pricing, narrowing margins, etc.) over the last year/two, but not the "calm after the storm" (which should be arriving soon, and has a bit already...with the death of some smaller players, Packard-Bell, Microworkz, and I believe, some European competitors).....In the next couple years, HP, IBM and Compaq will be facing some hard decisions, for sure..........For the last year (off and on)...I have mused about what will happen once one or two big players scale back their presence in the PC space (or go out of biz)....Certainly, competitive pressure will ease at that point (especially in the corporate market space), and margins (could and should) improve...as well as Dell receiving a market share dividend for being one of the winners (at little additional cost to the company)...I would think it will be easier, at that point, for Dell to retain customers, and, with less effort going forward, increase/maintain its win rate.....For the corporate space is more difficult to enter than consumer....Pretty good barrier to entry... I haven't seen HP do much significant to date, but the new CEO's spin machine is sure working great...and the market seems to buy her optimism (with little evidence of results so far)....Kudos to her..........so, I think, edamo is right (to an extent)...we (Dell) have a bit of a PR problem at the moment.....technically, the stock looks flat........but that can change quickly to.....I think of IBM and HP in the last year.... But, as always, the thrust of your argument(s) were first-rate...I think you would certainly agree with me that the "go-go" days are over (for the stock), but for solid, long-term 25-40% a year....Dell should be able to fit the bill pretty consistently going forward........also, at this point, I think Dell (also) is likely to go down less (than many highflyers) if/when we correct during the next few years........The benefits of being a quality value/growth name....(and being more reasonably priced)

To: Meathead who wrote (149094)	12/12/1999 3:28:00 PM
From: jim kelley	Read Replies (2) \| Respond to of 176387

Meathead, I believe you are correct in saying that we have entered a speculative bubble. This bubble has been promoted by a lot of companies such as the one Niles work for and is a self fueling frenzy. I got a call from some venture capitalists the other day looking for 1 to 2.5 M investment in a Web based bartering company which is to be a roll up of a bunch of other companies. The allure here is to take advantage of the VA LINUX type frenzy with an IPO next August. Of course they have to have the money by Dec 20---rush,rush, rush... These guys probably also get 10% commission plus 10% warrants as their fees for finding investors for these unknown companies. So there is a lot of incentive to keep the bubble going. So there are also a lot of second and third tier financial people exploiting this market mania. It is very much like a stock price pyramiding scheme. Yes, there is a lot of money to be be made if you are not the last man out! The mutual funds are also playing this game. When the pyramid crumbles there is going to be a lot of wailing and gnashing of teeth. Companies such as SUNW have been promoting their stock price not on the basis of their fundamentals and growth prospects (25% per annum) but rather by selling the notion that they are the backbone of the Web with their Java and Server hardware. Their claim that 75% of web traffic goes through their servers is designed to create the impression that they have 75% of the web servers. The reality is far different than what they are promoting. First they make no money off Java but they do use it to sell Java development workstations. Their workstation business is flat to down. Second, they actually have an installed base of about 13-14 % of the Web's servers. Moreover they are anticipated 25% growth next year. Yet this PR campaign which is reminiscent of the Ekhard's type of campaign has been effective in increasing SUNW's stock price parabolically. Now SUNW's market cap exceeds DELL's despite the fundamentals of the two companies. Meanwhile, long term investors must bide their time waiting for the bubble to burst and for fundamentals (40/50 % growth) to be rewarded. I for one would rather have my core investments be excluded from this Web infrastructure stock bubble. So I believe that the best course of actions for DELL is to stay focused on those four business arenas and ride this market mania out. regards, Jim Kelley