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

To: Big Lou who wrote (34686)	3/17/1998 6:51:00 PM
From: Jacky AY	Respond to of 176387

Thanks for using reasons instead of artillery to answer my post. DELL may have a superior business model relative to CPQ, HWP, and IBM for making and distributing PC. If that's os, in the foreseeable future (until CPQ, HWP, IBM emulate DELL's model and correct for their inventory) DELL should be traded at PE higher than that of CPQ. (Can't say for certainty for HWP and IBM as they are diversified company with <25% revenue derived from PC box-making business.) But how high a PE DELL should be traded at? I certainly won't pay 50x for a commodity business. However, I think everyone here should also agree that PC box-making, after all, is a commodity business. And commodity business is cyclical that goes through ups and downs. The major driven force of commodity market is supply and demand. Almost all analysts had predicted that PC demand is unlikely to grow revenue until sometime in year 2000 with falling ASP offsetting slow unit growth. So we will have a zero growth in demand. Moreover, high level of inventory from CPQ, IBM, and HWP has created excess supplies that need to be cleared out. In the next year of so, DELL may relatively outperform CPQ. But that's in relative term; what can happen is DELL declines less severe than CPQ during a down cycle.