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

To: Lucretius who wrote (37803)	4/14/1998 5:29:00 PM
From: Chuzzlewit	Read Replies (1) \| Respond to of 176387

Lucretius, I think you are giving in to an attack of hyperbole! Who believes that earnings and valuation don't matter? Future earnings prospects are paramount in determining the market valuation of any stock. But here we have a problem. There are people out there who are trying to extrapolate Compaq's problems to Dell. But Compaq's problems are self-inflicted to a large extent. Ultimately, this argument distills down to the scare of a price war. As they say, the proof of the pudding is in the eating, and we shall have a taste or two when we compare Compaq's and Dell's quarterly results. If you recall, that was done last quarter also, but you bears are constantly pushing the argument further out. In any event, Dell and Meredith report business as expected, so we have no evidence of this consequence. Then there are those like Jim Patterson who claim that the corporate market is likely to be lured into purchasing older generation machines. It doesn't make sense to me, but then, no evidence has been presented to support this claim. Finally, we have those who claim that rapidly falling component prices will hurt Dell's profits because sales won't increase fast enough to compensate for lost gross profit even if profit margins remain constant. Well, most industry forecasts are around 15% to 17% annual growth, with Dell expected to grow 3 to 4 times the industry average. That means that at 3.5x16 we end up with around 54% increase in units sold. That implies that ASPs would need to drop by about 35% from last year. But as we've seen, ASP's have not dropped anywhere near those projections, and in fact, as Dell aims more at the corporate server and notebook markets, I wouldn't be surprised to see ASPs within a $100 of where they were last quarter. So you see, Lucretius, that people on this thread are quite aware of these arguments, and for the most part have dismissed them as specious, because while they are plausible, they lack evidence. Now we come to a really tough issue: valuation. I've been trying to come up with a decent valuation model for growth stocks for years. Now, JBN3 knows my mantra on this issue very well, but you do not. Here it is: If you consider this stock to be overvalued would you please share with us your valuation model. To be plausible, it must take into account projected future cash flows (and the rationale behind those projections), the risk attached to those projections (standard deviation), and the risk-adjusted discount factor to apply. Presumably, this will include long-term interest rate forecasts. So as we say in poker, I call. TTFN CTC

To: Lucretius who wrote (37803)	4/19/1998 9:27:00 PM
From: jbn3	Read Replies (1) \| Respond to of 176387

LT, (Just got back from a ski trip and find more than 500 posts to read) re ... Stmts by the co. are taken as the absolute gospel and possible snags are blown off or not even discussed!! ... Perhaps this is because the management of this company has a verifiable track record of 1) truthfulness and 2) exceeding their forward looking statements. However, let's consider your implication that the management may not always tell the truth about its business environment. Suppose that you were an executive of this company with a considerable net worth in its stock and options. What would induce you to make a forward-looking statement which proved to be inaccurate enough to create a basis for successful stockholder litigation? Would it not be simpler to state the truth, be it positive or negative? Particularly, if the market is fairly well going to prove the relative accuracy of your statement within a finite time frame. This company, DELL Computer Corporation, founded its success on truth, value, and customer service. I believe that the continuance of these traditions is vital for its continued success. I can assure you, that at the first proof that the company's management is being less than straightforward, I will cease to be a shareholder. re --still waiting and watching w/ L-T puts in hand Does that mean that you have bought them? Ask yourself this: "If the company itself, which knows best its performance and potential, is selling long-term puts, why would I want to buy them?" re ... A little discussion of this might be helpful to all. It will certainly be of more value than "69,69,69 do I hear 70?" Honestly, I've never seen a better case for a short after reading this thread for the last 2 weeks. ... I partially agree here. Certainly that type of post does not really add to the knowledge of the company and its performance potential and wastes some people's valuable time. And if that were the only data one had, its reliability might well be called in question. However, to use a sports analogy, do you bet big bucks on Jose Canseco to strike out, on Michael Jordan not to get 10 points or 3 rebounds, or Brett Favre not to complete a pass, simply because the fans are enthusiastic? Especially, when you only get even odds at best? I think you get my drift.... DELLish, 3.