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To: posthumousone who wrote (10250)	8/10/2000 8:53:17 PM
From: S. maltophilia	Respond to of 436258

Why don't we start with the inane formula (?): 2 x GROWTH x EARNINGS = STOCK PRICE And, say, a year when earnings were flat. Therefore stock price = $0 per share. QED

To: posthumousone who wrote (10250)	8/10/2000 9:00:32 PM
From: pater tenebrarum	Respond to of 436258

first of all, the formula is completely arbitrary..who says stocks have to be valued according to it? secondly, as we have seen, operating earnings grow at a paltry 5%. speculation income doesn't count, as it is ephemeral - it depends on a continuation of the mania. so even if i use this arbitrary formula, based on operating earnings growth and actual operating earnings per share, a much lower stock price would result. if you want to know how low, calculate for yourself...using the data as per the report, i think Haim posted the details on MDD. currently Dell sports a p/e of 65...that's absolutely ridiculous for a 5% grower. based on its operating earnings growth Dell now has a PEG ratio of 13...that's ridiculous beyond words actually. my favorite gold stock GOLD has recently grown earnings 12 times as fast, quarter-on-quarter, without improvement in the gold price, and sports a p/e of 14. i mention a gold stock for purposes of comparison, because Dell is in a commodity business too...that's what PC's are, a commoditized business, with razor thin margins. wouldn't want to take anything away from Dell compared to its direct competitors, as it is certainly better than they are (not exactly a big a deal that). basically what Dell does, is screw together parts that are produced elsewhere, slap on its label and then market the boxes cleverly at excessive prices. that is where Dell's strength is, in the marketing of its product and its customer service. however, the time of excessive premium prices is probably over...and PC demand isn't what it used to be either. my prediction regarding Dell's one area of strength would be that its competitors will likely wake up and increasingly begin to offer the same quality of service, albeit at a lower price. whether it has been generally noticed or not, the value and effectiveness of brands is generally on the decline, for this very reason. so whoever listens to this clown could well be surprised by how far this turkey can actually fall, especially once the market mania gets a well deserved kick in the groin. last but not least, let's not forget that Dell is spending virtually its entire income for buying back its own bloated stock, a prime example of malinvestment and misallocation of resources. however, it must do this in order to keep stock dilution via its ESOP at a manageable level (dilution still takes place, in spite of the buybacks).and of course, DELL insiders are frantically selling their stock, Michael Dell himself is in fact selling the maximum allowable limit regularly. biz.yahoo.com and now watch the stock go to the moon...