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

To: Mohan Marette who wrote (80986)	11/18/1998 9:56:00 AM
From: PAL	Read Replies (2) \| Respond to of 176387

Hi Mohan!!! Funds still love Dell. _____________________________________________________________________ Dell Computer's Stumble Has Broad Impact But Many Fund Analysts Are Still Backing The Highflier Date: 11/18/98 Author: Dan Moreau Dell Computer, the powerhouse of tech stocks, stumbled last week when it reported third-quarter sales that were just slightly less than what Wall Street hoped for. You don't disappoint Wall Street without paying a penalty, even when you are reporting earnings up 55% at the same time. The computer maker reported a 51% rise in revenue from a year earlier to $4.82 billion. But that was below analyst estimates of $5 billion. Dell's numbers were not in step with the 250% rise in its stock price this year. Dell's shares plunged 12% to 63 3/16 by Monday from an all-time closing high of 71 1 5/16 last Wednesday. It rebounded 1 1/8 Tuesday to 64 5/16. Dell is the fuel heating the super performance of funds like $4.8 billion Legg Mason Value Trust and $9 billion Janus Twenty. It's a top-five holding in both funds. Fidelity Investments owns 38 million shares of Dell stock scattered throughout its family of mutual funds, according to Wellesley, Mass.-based Kobren Insight Management, which tracks Fidelity's funds. The quarterly results barely nicked analysts' outlook for Dell, however. Two-thirds of the approximately 30 brokers who follow Dell remain bullish with ''buy'' recommendations, Zacks Investment Research said. That ratio hasn't budged materially in months. ''As the stock has tripled year after year, we've had many opportunities to take profits and we have resisted the temptation,'' said John Schreiber, securities analyst at Janus Funds in Denver. ''We don't have a top price on the stock,'' he added. Janus owns some 40 million shares of Dell, making it one of the top two or three shareholders in the computer maker, Schreiber says. It also is among the fund family's top holdings, along with Cisco Systems and Microsoft. Dell is the top holding of Janus Twenty Fund, which was up 41% this year going into Tuesday. The fund's net asset value slipped 1.9% from Nov. 10 to last Friday. Schreiber notes that Dell's share price has usually weakened in November and December as analysts pondered the outlook for personal computer sales in the coming year. He noted, however, that Dell controls just 9% of the world personal computer market, leaving the company with plenty of growth potential. Year 2000 problems have also spurred personal computer sales as users decide to replace rather than repair systems, he says. Computers with older chips not geared for the new millennium could lose data. Fidelity does not comment on individual stocks in any of its funds' portfolios. But Ed Goldfarb, research director at Kobren Insight Management, figures Fidelity recently sold 7 million shares, or 16%, of its holding in Dell. Looks At Valuation ''Fidelity does pay attention to value,'' he said. But he says the fund group was unlikely to sell more. Dell represents almost 1% of the S&P 500 and Fidelity would be careful not to bet against the company by letting it become a smaller weighting in its holdings. But he says it would take profits on a stock that had appreciated as much as Dell. Dell's bright outlook, however, is reflected in the fact that Fidelity still owns some 38 million shares, about 1% of its holdings, Goldfarb says. According to Alan Lowenstein, assistant portfolio manager of $150 million Hancock Global Technology Fund, ''Dell still has the best operating model of anyone out there.'' Dell is the fourth- largest holding in the fund after America Online, Microsoft and Cisco. 'Growing Faster' ''Dell is still growing at over 50%,'' he said, referring to earnings. ''And even if it would grow in the future at 40%, it is still growing faster than most of the (computer makers). Critics say Dell has much too high a multiple, then it comes through with superior numbers. It is doing $10 million in sales a day on the Internet.'' Steve Esielonis, manager of $3.7 million Quantitative Growth & Income Fund, says he sold out his Dell holdings at just under $70 a share hours before Dell announced its third-quarter results because he believed the company would not meet earnings expectations. It was among his top five holdings, representing 5% of assets, when he sold it. ''I know it is not a ''quant'' term, but it just didn't feel right,'' he said. ''You can see it on a chart, when Dell starts to roll over, it really goes down.'' Not that Esielonis was losing money on the sale. On a split-adjusted basis, he had paid $5 to $7 a share for Dell. He says he would buy it back if it dropped 15% to 20%. He may never see that much of a decline. With the federal funds rate cut Tuesday, Dell shares were again on the rise. (C) Copyright 1998 Investors Business Daily, Inc. ______________________________________________________________________