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

To: Ally who wrote (261)	3/21/1998 6:41:00 PM
From: Jacky AY	Read Replies (1) \| Respond to of 2578

Good fundamental analysis, Denise. A few points to add... 1) To buy 10 mil shares/qtr, DELL needs to pay $625mil/qtr. (I know that DELL actually sells put to brokerage house in order to raise more cash for share repurchase; but the option factor is ignored in this simply calculation.) Given that DELL earns $300 mil/qtr, they still need another $325/qtr to enable share repurchase at your indicated rate. Does that imply DELL want to go to bank debt to buy back shares? Theoretically they can take the whole company private doing so. 2) Based on these calculations, my estimate of high share price potential is 40 pe = $1.86 x 40 = $74.00. However, if the market looks forward and see a more nominal growth of 30%, the share price would drop to around $56. So, my guess of Dell's trading range this year is $56 to $74. Your analysis is too rational. And being rational on Wall St. these days is one sure way to get killed. What I mean is just when everyone expects DELL will be range-bound this year, DELL may break either way... 3) IMHO, DELL's stock price this year will depend largely on whether they can convince big accounts to buy high-end rather than entry-level PCs. They need to deliver very competitive pricing while maintaining margins. Moreover, they need to sell many more units to offset falling ASPs. The upcoming year will be one of the toughest year to be seen. There're tons of obstacles for DELL (also CPQ and the likes) to overcome with not much help from software companies. (Win98 isn't expected to be a major sales push...)

To: Ally who wrote (261)	3/23/1998 12:10:00 AM
From: jjs_ynot	Read Replies (1) \| Respond to of 2578

Denise, Your evaluation is pretty close to mine. The one exception is that I expect a little margin pressure in quarters 2 and esp. 3 and some improvement in quarter 4. My trading range closely matches yours except I see a potential pickup for 4th quarter into the 90's. But I agree with your bottom line: this is a good trading stock for perhaps 6 months but not a buy and hold. Dave

To: Ally who wrote (261)	3/23/1998 9:01:00 AM
From: jjs_ynot	Read Replies (1) \| Respond to of 2578

Denise, To expand on the differences on our analyses. I don't expect the P/E to shrink in the third quarter as much as you expected more likely to 36-38 based on trailing. However, I expect margin squeeze to some level and to a lesser extent interest costs of $500. debt incurred to take a few percentage points off the earnings. Then I expect both P/E and earnings to increase in 4th quarter, traditionally DELLs best I believe. Thus our numbers work out to almost exactly the same with somewaht different assumptions. I do see that the stock might pop to mid 90s in 4th quarter FWIW. However, who knows - 4th quarter is a LONG, LONG ways away. Dave