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

To: jim kelley who wrote (67810)	9/27/1998 8:16:00 PM
From: nihil	Read Replies (3) \| Respond to of 176387

RE: Dell's valuation Dell's valuation depends on individual investors' decisions about what Dell's future earnings and market value will be. In fact, no one knows, and it is disagreement about future values that drives the market for this stock. Some people (apparently most of the members of this thread) believe that they can get better returns on their money in Dell than anywhere else. Others who don't own Dell, usually say they think it is two expensive, and that it will either stop growing or collapse some time in the future. Some of the holders believe that too, but believe that this ride is too good to pass up for the time being. I would place myself in this group. Don't get me wrong. I think that Dell is a marvelous company, with a great business model, and excellent management. I think the world is its oyster, and it might very well grow at 30 to 50% a year for five years in the future, if it is well-managed. Its major threat is that it is concentrated in in the PC industry where growth is uncertain. To compete with cheap devices and set-top boxes for the mass market, PC makers will have to make many PC's very cheap -- about the cost of a TV set of equivalent screen size -- and Dell prefers to produce expensive PC's (compare prices on dell.com to compusa.com). No doubt when necessary, Dell will be able to compete on price better than anyone, but the effect of low margins may lower its EPS growth faster than volume raises it with a resulting decline in P/E and decline in growth rate of stock price. This, by the way, is the same problem that has affected Intel, in, in the NIC market, 3Com. The outcome in all of the problems depends on timing and execution. Dell was lucky in being slow in its expansion in Asia. Dell's execution has been nearly flawless, so far. But the growing sector in the Internet based business in the future is going to be servers, and here Dell trails Compaq (so far) on price-performance tpc.org Price/performance in servers will be critical because rational customers are relatively uninfluenced by hype but insist on reliability and availability. Dell IMO must increase its R&D and win the blue riband in this market if it is continue to succeed. High valuations (P/E > 30) can be justfied only if there is a clearly feasible plan laid out for discussion. We need to hear more about Dell's plans for world conguest, cheap PC's, competition with devices, and strides in the server market. There are no secrets here, and the threats will not go away if we agree not to talk about them.

To: jim kelley who wrote (67810)	9/28/1998 10:09:00 AM
From: J. P.	Read Replies (2) \| Respond to of 176387

Thanks Jim Kelley, I kenw I could count on you guys for a good rebuttal of Mr. Negativity, Mr. Glass Half Empty, (Fleck). All I know is that Dell is putting plenty of coin in my pocket! :) Day is shaping up great, have a good week!

To: jim kelley who wrote (67810)	9/28/1998 5:56:00 PM
From: D.J.Smyth	Respond to of 176387

Jim Kelley, you're numbers are interesting. fleckenstein's analysis appears to be his belief that Dell's market capitalization shouldn't equal nearly 1/2 of the total PC sales in the market for this year. i can use his same argument and put it another way: there are 6 billion people in the world, if all 6 billion bought a computer this year at $2000 each, total sales would equal $12 trillion. let's see, Dell captures 10% of the market and it's sales equals $1.2 trillion X 1 times sales equals stock price in excess of $1000 currently. problem is, approximately 90 million boxes will be sold THIS YEAR, not including enterprise systems. of those 90 million PCs nearly 60% are upgrades, the remaining 40% are "first time purchasers". that means that of the 6 billion people on the earth, only 6/10ths of 1% of the total world population are new buyers this year and only 3% total own a PC of any kind (someone made a guess that another 8% have access to a PC). if sales double in five years at 15% a year, 3.1% of the world population will have a PC (at the current rate). The Chinese govt. mentioned the other day that it was their "goal" to help equip at least 10% of their population with a PC within five years (that would mean at least 130 million people in five years - not so far fetched; if the US. can spend $100 billion on roads over the next two years, the Chinese govt. can spend $30 billion over five years to help its population enter the age of technology - in some sectors they're outlaying money for this purpose now). of course, the world population in five years will have grown at least another 500 million to about 6.5 billion people. 500 million is nearly twice the population of the US now. it is doubtful that the US will be able to maintain 70% of the "technological mindshare" of the world in five years. it's spreading out. i don't know. it seems to me that Bill is looking short of the bigger picture here how can anyone say this is a "maturing market"? is it possible they're looking out their tinted rolls royce window as it passes by Wall Street and Broadway and are making an inflection regarding the rest of the world?