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

To: Roger A. Babb who wrote (36442)	4/2/1998 11:44:00 PM
From: Paul van Wijk	Respond to of 176387

Roger, Welcome on the thread. About your price-target of $40 for Dell, Hank posted a link three months ago to a post from you were you gave Dell a price-target of $25 ($50 pre split). Why have you increased your price-target on Dell with about 60% in 3 months? What makes you so bullish on Dell to do so? Anyhow, have a nice day and keep posting, Paul

To: Roger A. Babb who wrote (36442)	4/3/1998 12:25:00 AM
From: Sig	Read Replies (1) \| Respond to of 176387

Roger: When Hank first came on the thread he had several shorts from your first post of 1997 (ctxs,rmdy,vias, and zitl) That was a killer forecast, as by April they were all down from 38% to 70%. However the Dow was down 38%, which was not so obvious. If you took the same companies, from April on,they were shortly all UP by 50% to 350%. But again today, all but ctxs are still down by 46,53,or 56 %, and 3/4 is not bad. The point of saying this is because timing a short is far more critical than buying long. And if you catch the right time like Jan or Oct of 1997, there can be good money, but at this moment the market seems headed up. IMO the only way Dell is going down is for the whole Nasdaq to bite the dust. The bad news is out on CPQ, 7000+Radio Shacks will get their CPQ's in soon, and the Best Buys will get their kiosks. And although CPQ earnings may be nil, they have some good excuses, and sales should look very good. Try to be nimble and don't get caught in the Jaws from $%#@(Dell) Regards Sig

To: Roger A. Babb who wrote (36442)	4/3/1998 1:36:00 AM
From: Chuzzlewit	Respond to of 176387

Roger, if I understand your response, you are suggesting that Dell is no longer a growth company. If I accepted that premise I would be more bearish than you. IBM is the perfect model for flat hi-tech earnings. It trades at a P/E of approximately 20. On that basis, a totally flat future for DELL would price it at about $33 ($1.65 x 20). So I'm tougher than you are when it comes to a flat model (and that's calculated simply by comparison). But a flat model is trivial! The reason people invest in this company growth. So now we need to dissect the possible causes of your premise. There are basically only three possibilities: 1. Unit Sales will stagnate 2. ASP will drop rapidly neutralizing unit sales increases 3. Profit margins will erode Are you implying that the projections made by the various marketing firms are incorrect? They project that industry growth will be about 15% this next year increasing to about 17% the year after, and that Dell will grow at 2 to 3 times the industry average. That is, they expect that Dell will ship about 35-40% more units this year than last year. Considering that Dell's niche is the high end of the market (servers, power desk-tops and notebooks), it's pretty difficult for me to envision an environment where 35% more units will result in flat earnings unless you suppose that ASP drops by 26% and margins remain constant. Now, since market research firms like IDC have considerable resources devoted to market intelligence, I think it's reasonable to accept their unit growth estimates. That means that you need to justify the requirement that ASP will drop by 26%. Look back at Dell's ASP history. I think you will find that the company has maintained its ASP quite well. Finally, we come to the argument that gross margins will decrease. Any number of posters on this thread have examined that premise exhaustively, and come to the conclusion that it is not supported by any of the evidence. If you look back over the last couple of days you will see extensive analysis by people far more knowledgeable than I on this subject. Suffice it to say that I don't find that possibility credible. Regards, Paul