Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

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

To: jbn3 who wrote (57918)	8/12/1998 5:26:00 PM
From: Jerry Miller	Respond to of 176387

...well done. we thank you.

To: jbn3 who wrote (57918)	8/13/1998 12:37:00 PM
From: William C. Spaulding	Read Replies (1) \| Respond to of 176387

More hard numbers about Dell, obtained directly from Dell: dell.com dell.com Dell's growth rate in EPS from prior year: 1st qtr. 1997 --- 157% 1st qtr. 1998 --- 63% Revenue growth was 58% and 52%, respectively. As you can plainly see, growth rates, especially for EPS was much higher for 1997 than it was for this year, and yet, the p/e is higher this year. And, one must expect that growth will continue to decline in the coming years. So, really, we're looking at a company with its best years behind it. Is it possible that Dell was undervalued in 1997? What does undervalued mean? How can the fair value of a company be determined? IMHO, no one can know the fair value of a company' stock price. Prices of stocks float on an ocean of money. What level this ocean is at depends on how much money there is in the market at any given time, and this determines the general level of all stocks, and therefore, their p/e's. It also depends on how much new money is going into the market. And history generally shows that the money inflow declines in the second half of the year, because the stock market rarely does better in the 2nd half of the year than it does in the first. Look, we can all argue back and forth, but keep these things in mind: (1) Dell's pretty much acting like it did last year. Last year it was flat for 5 1/2 months, and I think the same thing is going to happen this year, because I think the Asia problem is going to stick around, and because the market has already appreciated so much. If you don't want to buy the 5-month projection, then just look at Dell's stock prices last year at this time. I've already presented the hard data in another post. It's basically doing the same thing. (2) Do you think it's really possible that Dell can actually be worth $16 billion dollars more than Compaq, when you consider that Compaq has much more assets and a much larger market. Also, consider that Compaq is better poised to take advantage of both the upper end and the lower end of the market. The low end of the market has a much greater potential than the upper end, because most people in the world can't afford expensive computers, and Compaq is in the best position to take advantage of both of these markets. (3) Who's been right so far? Is Dell rocketing to new highs. Hardly. It's doing exactly what I said it would do. Just like it did last year, when growth rates were much higher. Don't get me wrong. I think Dell will have a run-up for a few days before earnings, but it's not going to be much and it will be brief. I now think that it will have a hard time just reaching 115, but it may get there briefly. (4) Add all of these factors to the pessimism permeating the market, and I think a flat scenario for the rest of the year is a good possibility. I don't pretend that I can know what the market is going to do. No one can know that. There are too many factors that affect it, and none of those factors can really be quantified enough to make accurate predictions. And neither can any of you know. The question is, can you afford to lose? If you can, there's nothing to worry about. If you're a long-time holder, again, I don't think you have anything to worry about. If you're a Aug or Sept call holder, who just bought recently, you are probably going to lose, and if you hold past earnings, you're probably going to lose a lot, even if the stock climbs a little, because much of the premium will suddenly disappear. I can only repeat what I have said before. Let's wait and see. So far, the market is performing just as I expected. We'll see if it continues that way. There's nothing better to quash arguments than reality!