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Strategies & Market Trends : The Millennium Crash -- Ignore unavailable to you. Want to Upgrade?

To: hdl who wrote (5449)	6/18/2000 1:51:00 PM
From: WTSherman	Read Replies (1) \| Respond to of 5676

<what is your view on dell?< Well, I put DELL is a different category than EMC, ORCL, CSCO, etc., since they lost their status as an invincible stock. My take on DELL is that they are a very efficient mfg. company in a bitterly competitive business. They are growing at 25-30%/year and that will probably slowly go down to the 20% mark over the next 2-3 years. That makes is kind of hard to justify a P/E in the 70's. I also have a problem with the, well documented, fact that a huge portion of DELL's earnings over the years has gone to buy stock to cover options for employees. Book value of DELL is only about $5B, compared with a market cap of $120B+. All of which is pretty incredible given that they will have after tax earnings of more than $2B this year alone. Since they have minimal R&D and little or no patented or unique technology what you've got is a brand name, direct sales operation and a manufacturing capability. If they are not investing their profits in the company(book value would be a lot higher if they were) and are not returning it to shareholders in stock buybacks or dividends, just what is the reason for a $120B cap? Its interesting to note that INTC has considerably lower P/B, P/S, P/E ratio's than DELL even though INTC does have considerable unique and patented technology and that its products are the heart of DELL's business. Comparison's with IBM, CPQ and GTW also show dramatically lower ratios, though also lower growth rates. All that said, I have to admit that I sold my DELL stock way before I should have because I became dubious about the company's future for the above reasons. If I had not let my "rational" side talk me into selling I would have been a great deal better off financially!!