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

To: Time Traveler who wrote (47930)	6/17/1998
From: D.J.Smyth	Respond to of 176387

<<still growing under the tremendous pressure of Asian flu>> we should possibly ask ourselves how strong Dell's business would be if Asian hadn't faltered? or put another way, how strong will Dell's business be once Asia recovers? when Asia recovers what will be one of the FIRST items of purchase? the answer to the latter question, i believe, would invariably be computers; the quantity of which, I suspect will be great and come quickly. Asia is running on, what could be termed now, antiquated systems. the fact that Dell is doing as well as it is without Asia is amazing. with Asia (when it recovers) how well will it perform? a recent poll by the WSJ showed confidence in Asia's recovery at negative levels never seen since the polls were started. how much more gloom can be factored into their equation? I listened to a report tonight by a Barings analyst who lives in Japan. He thought it somewhat comical that the U.S. media and many analysts in the U.S. and elsewhere considered Japan on the brink of financial ruin stating, "things aren't as bad as people think." Japan continues to be the world's largest creditor nation per capita. this capital outflow will come back in the form of a lower yen eventually, he determined, as one can't continue to borrow at .05% interest ad infintium and reinvest at 5.5% in the U.S. another point mentioned was that most of the corporate stock in Japan was now in the hands of banks and institutional investors. Japan's market has reached a "holding" stage whereby to sell blocks of stock, a bank must sell the block to another bank or institution who is currently holding, most likely, a similar sized block. what is the point, then in selling? there is little reason to sell, he stated, so you retain the current value on your books and hope for a better day when the general populace or the world in general becomes interested in owning stock in Japan. it must be bad when the WSJ reports all those mutual funds who've begun placing 5% to 10% of their asset base in Asia (the Evergreen fund, for example, of which, you may have heard). naughty fund managers.

To: Time Traveler who wrote (47930)	6/18/1998 4:55:00 PM
From: Jim Patterson	Read Replies (3) \| Respond to of 176387

RE: Also, since Dell's inventory has decreased tremendously in the past few years, the amount of capital to do business is decreasing. That means the market has no reservation to reward Dell with a high multiple. All of this is fine and dandy. What the DELL bulls are forgeting is: Sales growth is not guranteed. There are many issues out there that could seriousely undermind DELL's abality to grow revenues and earnings. I don't know which one will come to the for front first. I do know, once DELL shows signs of faltering growth, The stock price will reflect the concern. DELL is a hardware comodity company. I could sit here and list the hardware comodity companies that have traded @ 50 times earnings. Many of the stock that would be on that list have since traded at 10 times earnings. Maybe it will be 10 times earnings that are 200% higher than 12 month trails today, It may be 10 times 50% of todays trails. We know how well DELL runs things when growth is strong. How much growth does DELL need to main tain status quo ? If revs grew 25%, what would happen to inventory management ? What if BA really did drop some of their DELL business into IBM's lap, What would a drop from 55% unit growth to 45% unit growth do to the bottom line ? I have a nagging feeling that just a little contraction in unit growth will hurt the bottom line by a factor of 2-4. unit growth drops from 55 to 45 could cause EPS growth to drop 20-40% from say 50% to 30 or 10%. We know what that would do to the stock. Jim