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

To: The Phoenix who wrote (60603)	8/24/1998 6:04:00 PM
From: Chuzzlewit	Read Replies (1) \| Respond to of 176387

Gary, this is one of my hot buttons. Concluding that a stock is either over or under valued implies a reasonable valuation model. Presumably, such a model takes into account three variables: the projected stream of future cash flows, the riskiness of that stream of cash flows generally measured by the standard deviation of the estimated stream, and the long term risk-free interest rate. Perhaps you would be kind enough to share your model of Dell's valuation with us. The alternative approach is to estimate the companies stock price based on growth of earnings, but that method suffers from the flaw of not relating the value to a suitable discount rate. I have come up with a metric called CNPEG, which normalizes the price of growth against the S&P500. Using that metric, and using a 45% long-term growth rate (which many on this thread would claim is too low) I show Dell as a screaming buy. Using the estimate of the next four quarters earnings as roughly $2.60, we have a forward p/e of 46. But the p/e of the S&P is roughly 26 and sports only a 7% growth rate. So normalizing for the market price of growth we have a CNPEG of roughly 0.28. Put another way, if Dell were priced the way the S&P500 is priced today, DELL would be selling for roughly $434 per share. So, it seems to me that either there is considerable risk included in Dell's current price, or there is considerable euphoria in the S&P500 which is not shared by Dell. TTFN, CTC

To: The Phoenix who wrote (60603)	8/24/1998 6:23:00 PM
From: Lizzie Tudor	Respond to of 176387

If Dell makes you uncomfortable just stay in Csco. Csco has a lot of plans in the works for supply chain mgmt. They arent at Dells level yet, but they will be one day (lower volume, higher margin so different economies of scale - but still there nonetheless). You will see improvements to Csco bottom line when this stuff rolls out. MH

To: The Phoenix who wrote (60603)	8/24/1998 6:58:00 PM
From: Joe Sabatini	Read Replies (1) \| Respond to of 176387

>>Fundamentally the stock is overvalued. Well, we know two things for sure at this point: 1. Money is never going to stop flowing into the market (i.e. 401K's etc...) 2. Dell is growing phenomenally at a time when most corporate earnings are in the dumpster. Conclusion: Dell is probably not overvalued. It's just one of the few games in town at this point. Joe S.

To: The Phoenix who wrote (60603)	8/24/1998 9:33:00 PM
From: SecularBull	Read Replies (2) \| Respond to of 176387

Gary, this has to be one of the most self-contradictory posts I've ever read. You state "DELL is a great company and has an excellent business model." Then you go on to say "The stock price assumes continued growth rates, margins/earnings. I think this assumption is badly flawed." Then you cap it off with "Fundamentally DELL is a great company." Now Gary, either DELL is, or DELL is not a fundamentally sound company. If growth rates, margins, and earnings begin to slide, how can DELL be a fundamentally sound company? What is your whole point, anyway? Please fill us in. LoD