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

To: Satellite Mike who wrote (43092)	5/19/1998 1:26:00 AM
From: Chuzzlewit	Read Replies (1) \| Respond to of 176387

Michael, maybe you should realize that the market values future earnings in determining market capitalization. That's why growth is important. Look at this: suppose HWP grows its earning by 20% per annum, and Dell grows at 50% per annum. In three years' time DELL will have increase its earnings by 228% while HWP will have increased its earnings by about 73%. If you lengthen the growth period to five years, HWP would increase its earnings by 149%, but Dell would have increased by 669%. Now lets suppose, for the sake of argument, that HWP and DELL had identical current earnings per share. Let's further assume that the growth assumptions above are reasonable. Now the question is which stock would you rather own. The answer is obviosly Dell if the share prices are equivalent. So relative to one another, Dell's price would be pushed up and HWP's would be pushed down. So, where would the equilibrium be? What would your guess be? Do you think that maybe Dell should be worth 2.5 times HWP under those circumstances? TTFN, CTC

To: Satellite Mike who wrote (43092)	5/19/1998 4:34:00 PM
From: Brian Malloy	Read Replies (1) \| Respond to of 176387

Without going into a great deal of detail. It is important to drill down and look at relative/ratio factors and not just the gross numbers. I feel quite certain that if you compare such things as earnings growth, ROE, ROI in particular over the past two years, that DELL is just crushing HWP. As a quick little side note consider: Say, I have a company that makes a 1 Billion dollar profit and it sends 500M to generate this profit. Then we have another company that churns out a 3 Billion dollar profit and it spends 2.5 Billion to generate the profit. Conclusion, in absolute terms firm two makes more money (3B vs. 1B) but it doesn't matter because in relative terms firm one is doing much better (1B/500M vs 3B/2.5B). Go through HWP and DELL's Annual reports and do the math yourself with the real numbers I think you will find what "just doesn't add up." Regards,