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

To: Bob Frasca who wrote (166491)	8/15/2001 6:43:24 PM
From: D.J.Smyth	Read Replies (1) \| Respond to of 176387

Bob, "You aren't seriously trying to compare Dell and IBM are you? It's not really a valid comparison for either the stock or the company. IBM, the company, has more revenue in services alone then all of Dell combined. IBM, the stock, pays a dividend and is trading at a much lower PE ratio. In effect, IBM is a mutual fund all by itself due to it's diversification. It has it's hand in so many pies that when one division does poorly the slack is picked up by another division. The ebb and flow of the economy has a much smaller impact, relatively speaking, on IBM than it does on Dell. IMHO, the days of Dell as a high flier are over. The company stands at the crossroads. Unless Dell can diversify it will never earn the respect that IBM has as an investment or a company. Just fyi, we own IBM because my wife is an employee and participates in the stock purchase plan (at a 15% discount) and has some options. (Underwater currently) I think Dell is a buy at $20-22. I sold at $27.00 and I don't think there is much upside from here." I'd wait for $19 1/2 Bob. $20 is a bit rich don't you think? Don't you think all those idiots selling their stock to you at $20 wouldn't also sell it for $19 1/2? IBM is so diversified that it can't make money on PCs? I thought diversification yielded improved economies of scale? What the hell are they doing? Services? Big Blue is wiping it's ass with one hand while cleaning up the other? What sense does that make...Why isn't this huge, diversified company able to cut the "Dell deals" and make money on PCs? Seems to me that one thing keeping IBM afloat is its international connections. You take away the fifty-year-old "social" bridge loans they've built and what do you have left? What linch pin is holding up their services division? Quality, know-how, price, underlying technology, connections (i.e., Dell), brilliance? Doesn't cancer in one section of the organization tend to compromise the entire organization? If they are bloated in the PC division, why is their services division not so subject to bloating? Isn't there a price to overdiversification? Such as loss of vision? So, Dell also utilizes IBM's service division. Have you considered the net effect Dell's contribution to IBM's bottom line is having relative to Dell's aggressive position in selling the bits and pieces? Despite all the handwashing the analysts have been doing of late (i can think of more graphic illustrations), the number of PC units and workstations sold into the market place have actually been increasing. Each PC unit, or workstation especially, needs servicing. Enter Big Blue. My goodness, aren't they glad someone is selling those units because they certainly are having problems doing it. You take away the Dell-effect, where does IBM's service division stand? The IBM answer: "Dell's sell-through is having so little net effect on Blue service divisioin that it's not worth discussing." Uh-huh. And the company that sold 25% of server units in the U.S. over the past twelve months isn't worth more than $19 a share. If IBM was so dang smart they would have exited PCs and improved their bottom line even more...or would it now? They've argued that the PC "loss leader" continues to be a ticket that lets them in the game. If the PC is "their ticket", and they can't make money selling it, why should we retain confidence in their "diversification" scheme? Isn't it possible that, contrary to IBM's service based model rhetoric, services will become less important over the next five years? The standardization of parts and integration of "plug n play" always-on internet technology may yield less need for services, not more. It's more efficient to replace and upgrade than "service". Better start making money on the PCs and workstations then...?