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Technology Stocks : DELL Bear Thread -- Ignore unavailable to you. Want to Upgrade?

To: Jorge who wrote (145)	3/17/1998 12:29:00 AM
From: Ally	Read Replies (1) \| Respond to of 2578

>> Denise...The stocks you mentioned, IOM, WDC, SEG didn't decline because of lowered volumes or any other technical reason...They declined because of fundamental reasons>> George, I was referring to these stocks declining in price even though volumes were light. I used them as examples to illustrate that low volumes does not mean that a stock price is about to break on the upside... which I believe was your post to me. Of course these stocks declined because of fundamental reasons. What could be important to note is that when their fundamentals were starting to erode, IOM holders had the same rationale for denial as devoted Dell holders of today. IOM shareholders talked about the company immuned to price cuts and the status quo of the business cycle for storage devices. They posted and cheered to each other that since the strategy of the IOM drive was entirely different from conventional drives, that IOM stock would never crumble. >>.How many times in the last five years has DELL's volume technicals looked "sickly" only to have made an investor rich by investing in the Fundamentals of this company?>> Dell's stock was flat, and didn't take off until July/96 when it went straight up from $5 (after all splits) to a high of $52 on Oct /97. It then went through a period of volatility (profit taking) during the market correction from Oct/97 to Jan/98, after which time, it went straight up again to $70. Dell's stock went "35 baggers" in less than 2 years! It is not like the stock has a long history or a Warren Buffet type of blue chip buy&hold stock. Dell found a strategy to sell pcs, and it worked fabulously, and has enriched shareholders well. However, to say that this direct sell strategy will continue to grow 50% annually forever is surely stretching it out a bit. Have you seen any high profit business strategy (especially direct sales) in today's competitive world that cannot be successfully emulated by competitors in due time? >>....If you are deep in the money who cares if price and volume drops?>> I would if I go from deep in the money to not so deep in the money. >>...You should be watching the fundamentals and not get scared out quickly anyway....Being afraid of price drops leads to timing the markets...missed upside, whipsaw results on the downside too>> I am watching the fundamentals. I'm of the view that the fundamentals for Dell is very likely to start changing, and the 50% growth could disappear within 6 months. I'm not taking the signs of suffering drive makers, earnings shortfall for chip makers, and pc pricing war lightly. Many Dell devotees may argue that the business climate has not changed, in the same fashion that Iomega devotees argued 6 months ago. I'm not saying that Dell devotees are wrong. All I'm saying, for me, it appears that the pc business climate has started to change. >>....Technical factors, like volume, are secondary to fundamentals and probably most important if you have a recent position and don't want to go into the hole right off>> I agree. Technical factors are just for fine tuning a decision, or to have fun with, like going short for a while. >>But once deep in the money, in a solid company, there shouldn't be too many worries on a daily basis>> For my money invested in a tech stock, I would worry. Any tech stock is not a buy&hold forever situation (well, maybe only MSFT). Intellectual property in computer technology re-invents itself in a short time frame. Dell's direct sale box assembly methodology already has a good 2 year run. I'm surprised that competitors have not caught on sooner and climbed on this wagon of 50% growth. But my bet is that it won't be too long more when this will happen. That's why I wouldn't touch Dell with a 10-ft pole at today's price. D.