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

To: BBG who wrote (89647)	1/18/1999 11:54:00 AM
From: Chuzzlewit	Read Replies (3) \| Respond to of 176387

BBG, I have thought long and hard about the issue of sustainable growth. It should be clear to all Dell investors that the growth we've enjoyed over the past 5 years cannot continue indefinitely given the current product mix. Here's why: According to various sources, the PC sector is growing at about 17% per annum. Assuming that this growth is sustainable, that implies that it will be about 220% of where it is now in terms of units sold. If Dell is growing at a 50% rate, and if that rate is maintained for the next five years that means that Dell's unit sales would be about 760% of current levels five years hence. But here's the rub. Dell currently has around 9% market share. So if trends continue, Dell would have around a 31% market share in five years. It is obviously impossible for Dell grow indefinitely at a faster rate than the market, because at some point Dell would become the market, and Dell's growth at that point would exactly match the market. Obviously, Dell can never become the market. A 25% - 30% market share is probably a reasonably optimistic goal, and we will probably see a gradual convergence towards those kinds of numbers. BUT, I believe that Dell's business model is extensible to other areas. If the management team can identify those areas and move into them timely, we could well see hypergrowth sustained for the foreseeable future. TTFN, CTC