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

To: Mick Mørmøny who wrote (89757)	1/18/1999 4:54:00 PM
From: Chuzzlewit	Respond to of 176387

Thanks for reposting this excellent article. I have long contended that earnings are an accounting fiction at best and a sham at worst, and this article clearly demonstrates why. Michael Murphy deals with this issue very nicely in his book on High-Tech investing. He discusses the the concept of the "virtuous cycle", whereby companies invest in their own future, and he provides some heuristics, such as looking for technology companies whose R&D expenditures are at least 7% of sales. He also discusses Dell, and points out that Dell is an exception to the rule because it effectively leverages the R&D spent by companies like INTC and SEG. But my word of caution here is to view these expenditures as drivers for future growth which needs to be expressed as cash flow, rather than as rapidly depreciating assets, which seems to be the author's position. Maybe it comes down to the same thing. TTFN, CTC