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

To: Chuzzlewit who wrote (36428)	4/2/1998 10:25:00 PM
From: Roger A. Babb	Read Replies (3) \| Respond to of 176387

Paul, before we try to place a value on Dell's growth, first we should examine the prospects of that growth continuing at the present rate. I don't think it will, I expect it to flatten over the next year. Everyone expects current growth rates to continue forever, but it just doesn't work that way. The NASDAQ floor is littered with the remains of last year's growth stocks. RMDY, PRST, ZITL, RACE, HCOM, CPQ, Hayes, Corel, etc. Growth comes in spurts and the market is unkind when the spurt ends. Yes, some seem to grow forever (like MSFT), but that is the exception, not the rule. Good luck and don't forget to take your profits.

To: Chuzzlewit who wrote (36428)	4/3/1998 12:55:00 AM
From: rudedog	Read Replies (1) \| Respond to of 176387

If you think it is overvalued then you must have some method of properly valuing a growth company In 1987 a friend of mine had a small company which was bought out, and he ended up with a pile of cash (seemed like a lot at the time, more than $1M). He had a lot of advice on where to put it but determined on his own to put the bulk of it into MSFT. Virtually everyone who knew him told him that MSFT was overvalued, the big money had already been made, everyone who needed a PC had one and there would be an inevitable leveling of the curve, etc. etc. I think every bear argument I have seen here in the last month about Dell was also used to trash the idea of buying MSFT. The recurring theme was that MSFT was greatly overvalued. None the less my friend decided to invest $500K in MSFT, at a price which split adjusted would amount to about 70 cents a share. Needless to say MSFT did not turn out to be overvalued, and those (split-adjusted) 700,000 shares of MSFT turned out to be a pretty good investment, now worth over $60M. He could certainly have done as well with many of the other tech stocks at that time with the same investment. My point is that as you say, valuation of a high growth stock in a very fluid market is a hard thing to quantify. I would love to see a believable metric for valuation, since for every MSFT or DELL there are good tech stocks that tank, but I think at the moment that there is a lot more art than science to the analysis. Dell's value seems high in comparison to some of their competitors, but I think that is more a reflection of the condition of the competitors at the moment. I would sincerely like to see a well reasoned answer to your question on the analytical basis for valuation of a growth stock.