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

To: Chuzzlewit who wrote (43220)	5/19/1998 12:14:00 PM
From: PAL	Read Replies (2) \| Respond to of 176387

Right now Dell is in the trading range. Traders are just looking which way it will go and take advantage for one point or two swing. Watch the last hour and especially the last 30 minutes. Dell stock will shoot over 100 as many people are panic missing the train which will speed up after earnings announcement. If you place a sell order for $ 100 Good For the Day there is a good chance you'll get it. But then you'll miss the morning runup on Wednesday.

To: Chuzzlewit who wrote (43220)	5/19/1998 12:30:00 PM
From: J P Cross	Read Replies (1) \| Respond to of 176387

DELL had great momentum in revenue growth quarter over quarter. Q Q %GRWTH Revenue 0197 2,412mm 0197 to 0497 7.3% 2,588mm 0497 to 0797 8.7% 2,814mm 0797 to 1097 13.29% 3,188mm 1097 to 0198 17.22% 3,737mm 0198 to 0498 22.00% 4,559mm ??? Where is Dell getting this momentum growth from? Anyone shorting DELL right now with this type of revenue momentum could be in trouble. Dell sells 80% to the corporate market where price is not the only factor driving the purchase. Now, at the consumer level the difference in a 1,500 computer and a 2,500 computer is significant. But, look at HWPs revenue growth with decreasingly net profits. Dell could escape severe price pressures with inventory control. Much of the cost will be passed on to the suppliers to keep margins in tack. In fact margins will keep improving with increased efficiencies as Dell increases the revenue. IMO, Dell will continue to surprise to the upside and maybe very very nicely. The P/E is 70 for a reason and the revenue stream doesn't hurt that argument. Rosemary, I like your number <.44> but hope it is low. If so Dell will see $125 very soon. JCross

To: Chuzzlewit who wrote (43220)	5/19/1998 2:13:00 PM
From: JRI	Read Replies (1) \| Respond to of 176387

Chuzz: Semi-OT Due to your (continued) timely, accurate and informative posting, you have been awarded the "Star Poster of the Week" Award. Thereby, you are also nominated for "Star Poster of the Month". (Winner to be announced at the end of the month). Unfortunately, this award carries no financial remuneration, but you do get our unending gratitude for your contribution to the thread. Congradulations! BTW- I am the sole judge of this competition. Bulls and Bears are eligible for all future consideration. (Ok, I'm acting a little fruity on this earnings announcement day, but what the hell....)

To: Chuzzlewit who wrote (43220)	5/19/1998 3:05:00 PM
From: Ed Zhao	Read Replies (4) \| Respond to of 176387

>>there are so many problems with you analysis that it is difficult to find a good starting place, but let me do it in the order in which it comes to mind.<< It's difficult to predict the future but it's easier to compare the value: DELL, 60 billion, SONY, 35 billion, Chrysler, Sold for 34 billion, Matsushita Electric ("Panasonic", "National", "Technics", "Quasar", "Victor", and "JVC") 30 billion. XZ

To: Chuzzlewit who wrote (43220)	5/20/1998 12:45:00 AM
From: Moominoid	Respond to of 176387

I'm sorry - given the 14 hour time difference and sometimes I do need to do some work- I haven't responded right away. 1. DCF depends on discounting free cash flows -- you have used earnings instead; Yes I know - earnings are just an approximation. Also the buyback of shares vs. issue affects the calculations and I didn't have data to hand so I ignored it. Maybe you cna give me data on both of these. 2. Your earnings growth rate are significantly lower than consensus analysts' estimates. I show the consensus estimate at 40% for long-term growth rate; The growth rate for 98 to 99 is from First Call - 28%. 3. Using a 5% "stub" for a mature industry is ridiculous. Perhaps you would be better served to use the projected growth rate of the entire S&P500 as the mature growth rate; I did the analysis the same assuming an exponential decline in growth rates to 10% with 10% then maintained forever - ie eps grows at 3 times the long run GDP growth rate of 2.5% and 2.5% inflation added on. The price comes to $36. The beta of 1.93 is the main driver of the results. 4. You didn't specify the discount rate you used, or the method by which you arrived at it; The discount rate is: 0.055 + .065*1.93 ie risk free rate = .055 equity premium = .065 beta = 1.93 Yes lowering the equity premium might explain current high stock market valuations. 5. Finally, it is odd that you invoke CAPM as the basis for your analysis, since that model is essentially based on the concept of the market line (efficient market hypothesis). I suspect that what you were talking about is a dividend capitalization model (but see comment #1 above). It's earnings capitalization using the CAPM discount rate explained above. Theoretically dividends or an equivalent measure should be discounted (Miller and Modigliani, 1961, Journal of Business). Only that will give a rate of return that equals the expected rate of return in equilibrium. However, on that basis Wall Street is phenomenally overvalued at the moment - like 3 -4 times. Using earnings it's only slightly overvalued as a whole. My calculations therefore give a benchmark to compare individual companies to what the valuation of the overall market is. I appreciate all the comments. I'd be happy to see other people post detailed calculations of how they justify the current DELL valuation. Again I don't expect $23 ever even in a crash. After a moderate crash Dell's beta will probably start to decline as investors begin to behave more rationally regarding it's price. David