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

To: GVTucker who wrote (155660)	3/28/2000 4:49:00 PM
From: D.J.Smyth	Read Replies (1) \| Respond to of 176387

Tucker The reality is that SUNW's growth is accelerating and DELL's growth is decelerating. It seems to me the market is making a correct perception based upon a very real reality SUNW's growth rate accelerating from 20% to 30% fits your model of acceleration? Dell's growth rate went from 30% to 50% back down to 30%. Predictive "meaning" derived from the actual growth acceleration number (in and of itself) is meaningless without being compared to (a) the total number of units per category moving into the market per market share, (b) the total number of "new" markets being captured or entered (i.e., South America), (c) the overall growth of the market as a whole per segment served, and (d) the overall potential of the markets served. Obviously, a principal comparative factor is how fast a company is growing relative to the overall market. Dell continues to exceed the overall market growth by greater than 1/3. I can move from a 50% to a 30% growth pattern and still capture an ever increasing market share in an expanding market (as the overall market is growing at less than 20%). Market share is important for producing future reocurring revenues. SUNW's market share, in certain lines, is actually being eroded by the "Dells". Nonetheless, the particular segment which SUNW serves is growing faster than the overall "PC centric" market which Dell serves. But, when comparing SUNW's high end server segment growth with the same low end server segment served by Dell, Dell's growth rate in servers and servicing is nearly double that of SUNW's. It is true that SUNW sells the managed system vs product only; but it's also true that Dell has been moving in this direction and moving quickly. Thus, the market takes this lopsided data and justifies a 35-40% higher market cap valuation for SUNW? The "higher end" SUNW model compared to the "lower end" Dell server model is also beginning to blur with Dell's new product entries. Do we continue to assume that Dell's server management and sales support model, although growing faster than SUNWs, will always and forever continue to serve the "low end"? Or do we formulate a model wherein Dell's approach (as is currently happening) includes both ends of the spectrum? If Dell can produce 60%+ growth rates in the low end, what can we expect from the higher end they are entering? I still find the market cap differentiation difficult to swallow.