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

To: Jim Patterson who wrote (32611)	3/6/1998 11:42:00 AM
From: Lee	Read Replies (1) \| Respond to of 176387

Jim,...Re:<<Long, long ago ect.. Book value was a key investment criteria.>> Jim, Book value is defined in my Barron's Finance and Investment Handbook as 1. The value at which an asset is carried on a balance sheet. Assets being, for example, a piece of manufacturing equipment. 2. Net asset value of a company's securities, i.e total assets minus intangible assets minus current and long term liabilities. It also explains that "Book value may therefore vary significantly from other objectively determined values, most notably market value." Now if we agree that book value was important in the industrial age when large expenditure for capital goods could be depreciated for tax purposes, and therefore, affect earnings positively. What can be this measure for the information age when a company's value is increasingly due to it's intellectual holdings? And how can this measure account for any premium the market place assigns to the stock price for reliable earnings growth? I guess I don't understand your point and since I'm not an economist or financial analyst, I can only understand things in the context of ROE. Thanks for a historical perspective though. Lee

To: Jim Patterson who wrote (32611)	3/6/1998 9:44:00 PM
From: Sabrejet	Respond to of 176387

Thanks for your analysis Jim. I agree totally with your point but the trend is your friend! This market has been nuts for the last 2 solid years. I went against the grain at times early on and got ripped. Until I accepted the conditions at hand, only then did I start making money. Earnings drive stocks for the long term (better said: interest rates drive long term growth). I hope and study so I'm not long when it all hits the fan for the whole mess! IF IT DOES! seczebra

To: Jim Patterson who wrote (32611)	3/9/1998 12:24:00 AM
From: jbn3	Read Replies (1) \| Respond to of 176387

Jim, We are (rapidly) moving from the industrial age into a technological or information age, for want of a better name. Book value was extremely important when the physical plant, which could be sold off, constituted a main factor of a company's value. Today many companies have evolved to something new. For example... An industrial company such as GM needs physical plant and equipment costing $102B to produce $164B in revenues, wsrn.com Further, is a buggy whip company, selling at 50% of book value, a better investment? On the other hand, if I start, say, a software company from an office in my home, and that company produces revenues of $10M a year with the potential to continue to do so for the foreseeable future, then the industrial age book value certainly has less meaning as a metric in evaluating my company's fair stock price. Based on a GM comparison, my company (giving my home a value of $100K and my office 20% of that) should only be producing about 32K of revenue. Mr. Paul Levy, the DELL thread's celebrated economist, has frequently pointed out that it is very difficult to assess a technology company's "fair" market value, especially in terms of growth potential, and has importuned the more knowledgeable of you(us) to provide him a working metric. I can see that 'historical' methods are seriously flawed, but am certainly not qualified to try to establish a better one. Personally, I believe that any such metric devised, will be a function of the PriceEarnings/Growth ratio. DELLish, 3.