Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

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

To: Brian Hutcheson who wrote (22506)	11/22/1997 9:35:00 PM
From: Bill Murphy	Read Replies (1) \| Respond to of 176387

Dell doesn't repurhcase all of its stock in the open market at current market value. A majority of their stock repurchases over the last year have come from the exercise of options, ie they purchase calls on Dell stock. If the stock doesn't continue to rise, then this will obviously backfire. But, for all we know, they may be repurchasing the stock right now at $50.

To: Brian Hutcheson who wrote (22506)	11/24/1997 2:12:00 AM
From: jbn3	Respond to of 176387

Brian, re: According to estimates Dell has $1B in cash , even if they spent all their cash (very unlikely!), they could buy only 12M shares or 3.3% of the total . I believe you are making the invalid assumption that DELL has to buy their shares at market price. DELL buys long-term calls and LEAPs, so the per share price they pay is considerably lower than the market price. Quoting from the 97 Annual Report, page 24: During fiscal 1997, the Company repurchased 20 million shares of its Common Stock for an aggregate cost of $503 million. The Company is currently authorized to repurchase up to 30 million additional shares of its Common Stock and anticipates that repurchases under this program will constitute a significant use of future cash resources. Do the calculations yourself to see that the average cost of the repurchased shares in fiscal 97 was about $25.15. Since this data was pre-split, I am not sure whether the Company is now authorized to repurchase an additional 60 million shares in fiscal 98. Also, from page 34: The Company utilizes put and call option instruments to facilitate its repurchase of Common Stock. At February 2, 1997, the Company held put and call option arrangements that entitle the Company to purchase 8.9 million additional shares of Common Stock at an average cost of $35 per share. This is a major reason why few people short DELL successfully, and why NO ONE does it successfully in the mid or longer term. Although our friendly bears, H&H, have supposedly virtually inexhaustible resources and patience, their bankroll cannot compare with the Company's. They are playing pot-limit poker with pocket change. Regards, 3