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

To: Chuzzlewit who wrote (89698)	1/18/1999 12:20:00 PM
From: BBG	Read Replies (2) \| Respond to of 176387

Chuzz... Thanks for the well thought out response... I agree... i.e. that DELL cannot continue to grow at the rate it has over the last 5 years but that it will continue to grow faster than the overall market... i.e. that it will continue to win more market share... I also agree that it is more than likely that DELL will apply it's business model to other businesses be they hardware, software or services... One question... I've heard numerous times that DELL's high P/E is justified by DELL's high flying earnings growth rate... if the EPS growth rate begins to slack off isn't it reasonable to expect the price to decline until the P/E reaches a level more in balance with the reduced earnings...? Thanks... BBG

To: Chuzzlewit who wrote (89698)	1/18/1999 12:39:00 PM
From: JRI	Read Replies (3) \| Respond to of 176387

Chuzz- You raise good points (as always)...Let me add for discussion.. If, in 5 years, we are looking at a situation where the commercial PC space is divided into the "haves" (Dell, Compaq) with enormous market share (25-30%), and other bit players (Micron, Gateway- who would primarily be consumer oriented), and a possibility that either HP and/or IBM are no longer selling PC's for businesses (although maybe notebooks,etc.) in that space....why couldn't we see an EASING of price pressures.....and higher gross margins (I'm only talking PC's here) due to a lack of competitiveness..ie., an almost oligolopy market for business PC's... Maybe we could see lower unit growth per annum (5 years out) but improved margins for these units....I think there is an assumption that pricing will always be as competitive (as in the past)...This is not necessarily going to be the case.. Additionally, surely by then, Dell will need not compete on price (to the extent) that it has needed to in the past (or now)...the brand will continue to gain in value, and, as time goes on, Dell is being seen more and more as the "quality" play, and not the "low-cost" play..we should continue to see benefits to margins as a result, and, indeed, this may a component of a rise in gross margins as time goes on.... As you stated, Dell may (should) have increased enterprise capabilities (and who knows what else) by then... So, yes, slower units, but (perhaps..more likely than not) better margins for these same items, no?

To: Chuzzlewit who wrote (89698)	1/18/1999 10:05:00 PM
From: Devil's Advocate	Read Replies (1) \| Respond to of 176387

CTC, In response to your post about DELL sustainable growth, I have calculated (I could be wrong) that DELL would capture the entire market in 9.69 years with a growth rate of 50%, current market share of 9% and a market growth rate of 17%. Of course, DELL will never be the market and growth rate will slowly decrease if the company doesn't expand into other areas. But this number shows that decreasing growth is near (about 3 to 4 years IMO). Furthermore, DELL has a more important market share in the US. So, growth rate decline will start in the US market (this year or next one IMO). Indeed, DELL can expand its business model into other areas. In fact, DELL has already started by selling servers and now by going into the storage business. That's precisely what DELL needs to do to prevent growth decline. As you can see, DELL has chosen to expand in high margin areas. Also, those areas are closely related to current business.