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

To: kemble s. matter who wrote (157553)	6/1/2000 6:56:00 PM
From: calgal	Read Replies (1) \| Respond to of 176387

Hi Kemble! RE: ``It think this region is very quickly trying to capitalize on the technology and the productivity advantages of computing devices,'' Donald Collis, vice president in investor relations at Dell, told Reuters in an interview. He said the trend was generating business potential for Dell, which provides computer products and services. Don Collis was DELL's first CFO....Why don't you write him and ask him the math here... :o) BUY DELL Best, Kemble That's a no-brainer! Can't you throw me a curve ball? This is too easy! I still say buy Dell.:)Leigh

To: kemble s. matter who wrote (157553)	6/4/2000 3:09:00 PM
From: calgal	Read Replies (2) \| Respond to of 176387

Hi Kemble! I was catching up on my reading and I found this in USA Today! :)Leigh "Consider the comparison of old-economy stalwart 3M and tech titan Dell Computer. If you compare only P-Es, 3M looks less risky at 18 times fiscal 2000 earnings vs. 47.5 for Dell. But once you factor in the projected five-year growth rates for each company, the picture changes. Dell is expected to grow profits 32.3% a year through 2005. Analysts expect 3M to boost profit only 11.2% per year. The bottom line: 3M's PEG ratio of 1.6 is actually higher than Dell's 1.5 PEG, suggesting Dell offers a better risk-reward ratio even though its P-E is more than double 3M's." usatoday.com 06/02/00- Updated 03:40 PM ET New math sweetens some tech stocks By Adam Shell, USA TODAY NEW YORK - There are still plenty of reasons to avoid tech stocks, right? They are risky. They trade at ridiculously high prices. They probably won't be able to sustain their robust growth rates. What's more, better values might be available in old-economy stocks. But some top strategists are saying it's a good time to buy tech stocks. The Nasdaq's 12% surge this week indicates investors are following their advice. This would not be happening if not for the three-month bear market that has mauled technology stocks. Prior to the market meltdown, the knock on tech stocks was that they were too richly valued, that they couldn't justify their valuations despite optimistic earnings forecasts. Then the bears came along and sliced the value of the average Nasdaq stock in half. While strategists admit many tech shares still are not cheap, they say top-tier tech names such as Cisco Systems and Oracle may not be bad bargains. "Investors should not shun tech," says Jeremy Siegel, a professor at University of Pennsylvania's Wharton School of Business who wrote an op-ed piece in March warning investors to steer clear of overpriced big-cap tech stocks. "Price-to-earnings ratios have come down dramatically. We're getting back to more reasonable levels." How reasonable? The average P-E of tech stocks with market values above $85 billion is now 69, down from 126 just before the March 10 Nasdaq peak, Siegel says. In contrast, the average P-E of non-tech stocks is up to 35 from 30. The bottom line: P-Es of big-cap techs are now double that of non-techs. In early March, the ratio was about 4-to-1. Old vs. new The debate now raging on Wall Street is how much of a premium one should pay for companies with superior earnings growth. Is it more prudent to purchase cheaper old-economy stocks growing earnings in the single digits or to pay more for tech companies growing at a 30% or 50% clip? In the past week, research reports by top strategists at Prudential Securities, Lehman Bros. and PaineWebber addressed the valuation issue. Prudential said big-cap techs "don't look so expensive now." Arun Kumar, senior equity strategist at Lehman Bros., says it's "as good a time as any to begin buying tech stocks." What changed? The sharp decline in tech shares slashed the P-Es of most tech stocks. Tech companies continue to post robust earnings growth, a trend Wall Street expects to continue. "The valuations don't look as scary as they did a couple of months ago," says Ed Keon, director of quantitative research at Prudential Securities. An analysis of the Dow Jones industrials and the Nasdaq 100, performed for USA TODAY by Strong Dow 30 Value fund manager Rich Moroney, paints a mixed picture. The average P-E of Nasdaq 100 stocks based on trailing 12-month earnings was a hefty 153 through Wednesday's close. But plug in the expected earnings for the companies' current fiscal year, and the average P-E falls to 80. In contrast, the average P-E of slower-growing Dow companies fell less dramatically once future growth rates were factored in - 27 on trailing vs. 24 on forward earnings. Bulls argue that the narrowing P-E spread makes tech a good bet. But Moroney warns that there is "still a lot of risk in tech." Bill Nygren, manager of Oakmark Select and Oakmark funds, also is not convinced that techs' nose dive created a can't-miss buying opportunity. "The only reason some people see value now is because tech stocks traded at even more ridiculous levels a few months ago," Nygren says. Not so fast The risk-reward trade-off may not be so lopsided. Based on their PEG ratios - which measure a stock's P-E on estimated fiscal 2000 earnings against its expected annual earnings growth rate - a case can be made for tech. Consider the comparison of old-economy stalwart 3M and tech titan Dell Computer. If you compare only P-Es, 3M looks less risky at 18 times fiscal 2000 earnings vs. 47.5 for Dell. But once you factor in the projected five-year growth rates for each company, the picture changes. Dell is expected to grow profits 32.3% a year through 2005. Analysts expect 3M to boost profit only 11.2% per year. The bottom line: 3M's PEG ratio of 1.6 is actually higher than Dell's 1.5 PEG, suggesting Dell offers a better risk-reward ratio even though its P-E is more than double 3M's. "Although more traditional companies appear to be cheap, their earnings are cyclical," Keon says. "Yeah, you're paying more for growth, but right now it looks like the trade-off is fair." In fact, using the PEG ratio, Lehman Bros. found that the Standard & Poor's tech sector now is cheaper than health care, consumer staples and energy. The big question is whether tech will continue to grow earnings much faster than the broader market. Nasdaq 100 companies are projected to average 29% annual earnings growth the next five years vs. 14% for Dow companies. "That's a big if," Siegel says. Even if tech earnings do slow, it won't be the end of the world. "Tech earnings will still hold up better than any other sector," Keon says. "If you buy tech stocks now, you'll probably be happy a couple of years from now."