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: BGR who wrote (80514)	11/15/1998 7:40:00 PM
From: yard_man	Read Replies (1) \| Respond to of 176388

I've never put the pencil to paper to try to figure that out. It would be very tough for me to figure out fair value. I would need to make a reasonable prediction as to what earnings and revenues will do in the coming couple of years at least. I believe that the growth in margins will shrink substantially from this year to next -- probably only markedly apparent by the 2nd quarter next year. Perhaps by the end of the year they may even turn down. (Think about it -- how realistic is it to expect that margins can accelerate indefinitely.) If that is proven to be true, whatever price I might estimate (guess) for fair value would certainly be "overshot." This almost always happens when stocks are priced to reflect a longstading acceleration in earnings and the accleration stops or goes the other way. In the end analysis -- that (direction and timing of the change in margins as a % of revenues) may be all one has to be able to get right to know when this fantastic run will be over, regardless of what the overall market does (although, I am quite bearish on the stock market as a whole for the next 2 years or so). It is interesting to ponder why this (competition eroding margins/overcapacity) hasn't happened already. I think there are several reasons. One is timing -- there is an ongoing glut in the production of the chips, drives, etc. -- the overbuild in capacity must first become apparent there. (I don't buy the bounce in the semi capital equip stocks as indicative of improvement in the overall businesses -- read a little article on CMP about AMAT possible buying a sofware vendor specific to running the equip to ensure the survival for its own purposes -- I don't think such things are contemplated when it is expected that a sector as a whole is going to keep growing going forward). Perhaps some of the other reasons have to do with the tendency of investors in IT to "overshoot," keep buying the stuff, upgrading beyond the point where there is a real boost to productivity. It's good to keep the whole thing (expansion of the us of IT in the economy as a whole) in perspective which is very hard when focused on one industry -- there has been an unprecendented investment in this kind of equipment over the last 5 years. It has been a very narrow economic expansion in some regards. What will folks do when they can get instantaneous access to sales, mfr data, your bank account, all the news you want, and on and on. Sure there'll be a steady replacement of bits and parts, but the phenomenal growth of investment of the last few years getting everyone to the basic level we are at now? One can continue to extraplote based on exponential trends or wonder if there'll be a slowing at some point. I think the profit center is getting ready to move on, but where ... Sorry for rambling. I guess what I'm saying is the bears on these stocks will have to be right at some point unless the fundamentals of market economics are proven to be wrong or not applicable to this kind of technology. It's been an impressive run, but I'm not convinced yet. Regards, Tippet

To: BGR who wrote (80514)	11/16/1998 12:29:00 AM
From: Islander	Respond to of 176388

Valuation of Dell relative to other PC makers: (Briefing.com) Based on these figures, Dell and Gateway remain the two best buys in the group... Much was made Friday ofDell's relatively high p/s ratio but compare sales growth rates and the stock is "cheap" relative to IBM, MUEI, AAPL... Gateway simply scores the best across the board and would be our top choice based on value... CPQ also seems slightly undervalued at current prices... IBM clearly is overpriced relative to its peers and Apple needs to show it can grow revenues (company has posted yr/yr sales declines in each of its last eight quarters) before we want any part of it... Micron and Hewlett appear to be fairly valued near current levels.