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

To: Jim Patterson who wrote (25733)	12/19/1997 11:51:00 AM
From: Meathead	Read Replies (1) \| Respond to of 176387

Well, to clarify, the stock drop 70% I'm talking about from Feb93 to Jul93. They lost money that year mainly due to notebooks. 70% stock drops happen when you loose money... that is, negative EPS for the year. So sure, anything can happen but I think the worst thing we could see from Dell in the next several quarters is slower earnings growth but no qtr/qtr decreases in EPS. That's positive growth. The concern now is lofty PE's. Should Dell's growth slow to below 40% yr/yr sooner than expected, we absolutely could see PE ratios in the 15 to 20 range again. I say, sooner than expected because it is expected that growth will slow to 20-25% in by 2000. My downside case analysis shows that if in 1998, Dell exceutes poorly, ASP declines accelerate faster than anticaped, CPQ, HWP, IBM's gangup on Dell slows their growth, sub-Zero and internet appliances displace more PC sales than expected, then I see earnings coming in ~$3.35/shr, a 30% yr/yr growth rate. A punishing PE of 15 puts the stock at $50/shr. Negative growth or a massive one time stumble like the notebook situation is not factored into my downside analysis. If that happens, the stock is toast. MEATHEAD