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

To: Sonki who wrote (68309)	9/30/1998 10:04:00 PM
From: Chuzzlewit	Read Replies (1) \| Respond to of 176387

Hi gang, I'm back. Looks like a million unread messages on this thread. Okay, Sonki, let me start by saying that I was simply calculating out the value of the stock assuming the conditions I was given (which included a terminal P/E of 30). I simply stripped away the implied assumptions of share dilution and eroding margins. Let me answer your next question with a question: why does DELL need to revert to its historic P/E? Where is it written? To put it another way: we have seen long-term interest rates continue to decline. All other things being equal, that ought to increase the value of equities, right? That means that P/Es are sensitive to interest rates and move inversely. So who cares about history? We are not dealing with 9% or 10% LT interest rates anymore. So why should P/Es behave like they did with high interest rates? The second point is that if you think about it carefully you will realize that P/E is a red herring because nobody pays for last year's earnings! Investors are paying for the stream of future earnings. Putting these thoughts together leads me to believe that it makes much more sense to me to think in terms of earnings yield -- expected earnings over the next four quarters as a fraction of current price. TTFN, CTC