Disregard the numbers in post 25842. Here is the downside
case update which is even more bearish.
$3.11/shr vs. earlier post $3.35/shr. PE of 15 =$46.65
stock price
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Actually, my downside case is pretty bearish. So is the
analyst consensus of 33% EPS growth.
In my scenario,
ASPs would have to decline faster than IDC projections
for 98.
qtrly - yr/yr EPS growth (i.e. Q497 EPS divided by Q498 EPS)
would only equal IDC's prediction for the industry as a whole.
This would suggest little market share gains... not likely
given the current pressure the big 4 are applying to the
little PC outfits who own >50% of the market.
Net margins would have to erode quickly... there are too
many things working against serious net margin erosion,
the asian situation, reduction in SGA and tech support due
to extended internet business model, continuing
shift towards servers and workstations and the prolonged
avoidance of playing in the entry level market.
Dell would have to finish 98 with a 21% unit growth rate...
seriously below forecasts.
One must take into account the effects of the stock buyback
as well. Here are my downside numbers with 96 and 97 for
trend reference.
Net 4Q Rolling
Qtr Shrs OS Rev EPS Margin EPS
Q1 96 390 1,638 0.21 5.00% 0.74
Q2 389 1,690 0.29 6.60% 0.86
Q3 382 2,019 0.39 7.40% 1.06
Q4 372 2,412 0.51 7.80% 1.39
Q1 97 368 2,588 0.54 7.70% 1.72
Q2 364 2,814 0.59 7.60% 2.03
Q3 360 3,188 0.691 7.80% 2.33
Q4 356 3,379 0.73 7.70% 2.55
Q1 98 350 3,546 0.75 7.40% 2.76
Q2 346 3,615 0.75 7.20% 2.92
Q3 342 3,862 0.80 7.10% 3.03
Q4 338 3,934 0.80 6.90% 3.11
Qtr vs. year ago
Qtr RevGrth Erngrth Qtr/Qtr Units ASP
Q1 96 44% 53% 20% N/A N/A
Q2 40% 74% 37% 670,528 2,520
Q3 43% 108% 36% 795,863 2,537
Q4 57% 189% 29% 921,386 2,618
Q1 97 58% 157% 7% 977,154 2,649
Q2 67% 105% 9% 1,056,240 2,664
Q3 58% 77% 17% 1,214,500 2,625
Q4 40% 45% 7% 1,299,515 2,600
Q1 98 37% 39% 7% 1,390,481 2,550
Q2 28% 28% 4% 1,446,100 2,500
Q3 21% 16% 9% 1,576,249 2,450
Q4 16% 10% 4% 1,639,299 2,400
Not saying that it can't be worse than this, however, this
scenario falls well below Dell internal, IDC and industry
analyst forecasts. If it were to happen, and my opinion
is that it likely won't, the stock would get crushed nearly
to the same magnitude as if they had lost money for the year.
So, when it comes to stock price, a more bearish scenario
does'nt really matter.
MEATHEAD |
