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

To: Dell-icious who wrote (42441)	5/15/1998 8:36:00 PM
From: jim kelley	Read Replies (1) \| Respond to of 176387

RE: Ted Murphy is a domestic turkey analyst. "Dell Computer's (DELL:Nasdaq) price-to-earnings multiple is now higher than Microsoft's (MSFT:Nasdaq), at 47 times 12-month-forward estimates versus 44. I find that amazing -- and unsustainable." Here is another guy that does not do his homework. MSFT has shown a stock price growth rate of 202 % over the last 100 weeks while DELL has shown a 1300% growth rate. For high growth rate companies like DELL a forward P/E should be used in estimating its "fair value". Microsoft cannot grow appreciably faster than the PC market as a whole because it has 90% share already. The PC market is growing 15-20 % per year. DELL is growing at 3-4 times the rate of the PC market. It has only 6% share and 94% to go. Murphy fails to be able to distinguish between DELL and MSFT, that is why he is a domestic turkey.

To: Dell-icious who wrote (42441)	5/16/1998 12:11:00 AM
From: Chuzzlewit	Read Replies (1) \| Respond to of 176387

Dell-icious, I always get a kick out of opinions like this. How does a company sustain its valuation? Answer: it doesn't. Valuations are provided by the marketplace, not by the company. The company generates cash flows, and based on the perception of investors of future cash flows a valuation is arrived at. So what do investors see? The see a computer market that is expected to increase at a rate of around 15%. But they also see a company that is growing at three to four times the rate of market growth. In other words, the perception is that Dell will grow unit sales at between 45% and 60% per annum. So let's SWAG the growth and say that Dell unit sales will increase at around 55%. "Well", the critics argue, the component prices have been dropping, "and with it the ASPs." So lets factor that it. Lets assume that ASPs fall at 10% per annum. What do you get? Revenue growth of 39.5%. Now, if you consider that the YPEG for the S&P500 is around 1.3 (if my memory is correct), that would yield a forward p/e of around 51 for DELL. So I would ask Mr Murphy this, "what needs to happen in the marketplace for the current valuations to be maintained?" But this is just one pussycat's view. TTFN, CTC