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

To: John Koligman who wrote (21055)	11/10/1997 7:15:00 PM
From: Eric Klein	Respond to of 176387

It seems like the Bulls on this thread argue that Dell is a great company and therefore Dell stock will rise. Dell IS a great company. The Dell stock price is another matter. PC manufacturers have traditionally not been able to earn very good profit margins on sales. That's why they have usually sold in the neighborhood of 1 times sales, Dell sells at 2.5 times sales. I think the fear is not that Dell's sales will fall, but that their margins will fall. Dell's P/E is close to 40, not much room for margin slippage. Compaq and HP are copying Dell's manufacturing and distribution model. That means more competition, that means shrinking margins.

To: John Koligman who wrote (21055)	11/11/1997 2:47:00 PM
From: William C. Spaulding	Respond to of 176387

William - CPQ started tanking the day earnings were announced. They beat the consensus estimate and had great forward looking comments made by management. Based on CPQ's performance and current market conditions, it looks to me as if earnings don't matter too much. Unless market conditions change, why would Dell rocket UNLESS the number was truly a blowout??? The reason why Compaq's stock price has slid is because the market is sliding. I've said this many times before (although it's been a while since I said it last) that great earnings and stock splits aren't going to buoy a stock in a declining market. If you all remember I said this before concerning Dell's stock splits, citing Nov 1995 as an example. There are many factors that affect a stock's price, and there is no way to quantify any of it. I can only suggest what I see as patterns. There is no way to be sure what the market is actually going to do. This is why I buy cheap options over different stocks and DIFFERENT TIMES! That way when I do have a few big wins, it more than makes up for the losses. However, the way it looks now, I don't think the market is going to do much for the rest of the year. The stock market has already appreciated considerably, and there will be p/e contraction at some point. I just didn't know when. Well, we may be seeing that now. If you're low on money I would recommend just waiting until the next earnings cycle in January. Earnings times is the best time to make money on short-term options. Although December is historically the best month of the year for stocks, I would skip investing this December unless you can afford to lose again, because it really looks like the market has petered out. Of course, if you already own the stocks, don't sell just because the market itself has dropped. Just wait it out. If you're on margin, this will teach you not to use margin. It generates a very unpleasant feeling. I know because I've gone through this before. I've found a system that works, and I stick with it. If I'm wrong about my short-term market forecast, I don't worry about it. I'm ready for it. Because I know I'm going to be wrong some of the time. That's how I play the game, and so far, I'm way ahead.