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

To: China Trader who wrote (148)	3/16/1998 1:50:00 AM
From: Ally	Read Replies (2) \| Respond to of 2578

>> I think Dell is well run financially>> So do I, however, I think the stock price is way too high considering the events unfolding now on the pc business environment. Risk outweighs reward holding Dell at this time. One bad quarter, and zap... the stock price can easily plummet. >> Also borrowing is good to allow their cash to find better use elsewhere, in view of low interest rate. But I don't feel that Dell is going to use their cash to buy other companies, as rumored in other posts>> The point I was trying to make is that I find it unusual that Dell buys back significant amount of it own shares yearly. If I recall correctly, for this year, its board has authorized buying back up to 50 million shares! Usually a company buy back its shares only when its shares are undervalued and not recognized by the market. The only other main reason a company would buy back its shares is to prop up the share price, for example, just before a share offering. It just makes me uncomfortable if a company (with large share reserve) is buying back shares as a matter of course to maintain the stock price or beat analyst's earnings expectations. The other puzzle is why borrow $500 million when you have $1.6 billion in cash? >> It would be interesting to see how the market unfolds in the next 60 days. I sincerely hope that the market takes a reasonable correction of 10-15 percent. The other alternative of market going up to 10,000 is scary for me, as that can create a bubble when the next fall would be too hard for people to bear, which can create a worldwide recession>>. I agree. It is a strange US market... corporate earnings forecast keep going down, and yet the market keeps going up. It's probably all the liquidity in the system finding its way into the stock market (the only game in town because of low interest rates). My guess is that the market will continue to go up until the 1st quarter earnings report at which time reality could set in. Should earnings again falter in the 2nd quarter (when the real effects of the slowdown in Asia wash in to N. American shores) then the market could undergo a real correction, and perhaps greater than the one in Oct/97. Right now, the upside momentum seems too strong to stop the markets from making new record highs. D.