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Technology Stocks : FSII - The Worst is Over? -- Ignore unavailable to you. Want to Upgrade?

To: Joe Dancy who wrote (2107)	7/19/1998 2:25:00 PM
From: Donald Wennerstrom	Respond to of 2754

Joe, Again, thanks for the good articles. I need a steady stream of those to make me feel better. I hear what you say about value investing, but it is hard to watch the growth stocks fly while the value stocks keep going down. A case in point this morning can be gleaned from the L.A. Times business section. Both Petruno and Flanigan have good articles today on technology. First for Petruno - his article is at: latimes.com A subset of the article is about Dell which I will quote below. "More likely to trouble veteran Wall Streeters are the big numbers attached to many technology stocks today, including some of the sector's best-known names -- like Dell Computer. With Dell's stock at a record $117.56 a share on Nasdaq as of Friday, the market now values the personal computer maker at about $74 billion. That number doesn't look so huge next to, say, GE's market capitalization. But it was only three years ago that the market thought Dell was worth a mere $3 billion. Have things changed that much in three years? Certainly, Dell's sales and earnings growth have been spectacular. Its direct-to-customer sales strategy means it builds to order, thus carrying little inventory. Which also means there isn't all that much to Dell, period, in terms of physical assets. The company's shareholder equity -- the excess of real assets over liabilities -- was just $1.4 billion as of April 30. The $74-billion value that the market has ascribed to Dell, therefore, almost entirely reflects the idea of Dell and what investors trust is a blueprint for long-term success in the minds of Dell's actual physical assets to which shareholders could lay claim. Well, it's a virtual world anymore, so what's wrong with that? investors may well ask. On Friday, at Dell's annual meeting in Austin, Texas, Chief Executive Michael Dell got a standing ovation from shareholders. Those who have been lucky enough to own the stock since 1994 have seen their investment mushroom 46-fold -- which has helped ensure another big number, namely, the Nasdaq composite stock index's breaching of the 2,000 mark last week. As for Dell, "Our shareholders have been and will continue to be rewarded in the future," a confident Michael Dell proclaimed." The Flanigan article can be found at: latimes.com