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

To: Chuzzlewit who wrote (92173)	1/28/1999 12:24:00 PM
From: jhg_in_kc	Read Replies (1) \| Respond to of 176387

Re: treading carefully and Dell/AOL valuation. What would you say to this line of reasoning by Joe E. (on the AOL thread.)? From: Joe E. Now that AOL has revenue growth less than 100%, it is closer to the day when it will be valued as a regular company. However, since profit growth is still >100% (by quite a ways) AOL's P/E is meaningless. Eventually profit growth will = revenue growth, more or less, and both will be less considerably than 100%. Until then P/E's matter little. This is my opinion based upon watching how stocks are valued over the last several years. When growth is very fast, it seems the company might indeed grow to the sky. The valuation is based as much upon the size of the market in which they participate as upon the specific company results. When growth slows to a more normal pace, there are too many comparables around and variations in price are more easily arbitraged out. Damn few public companies are growing either revenue or profits >100% per year in a way that looks like it can continue for an extended period of time. AOL is one, but is starting to to look more normal, more like say Microsoft or Cisco. Not yet, but soon. Say a couple of years. Any thoughts? jhg

To: Chuzzlewit who wrote (92173)	1/28/1999 12:25:00 PM
From: JRI	Read Replies (1) \| Respond to of 176387

Chuzz- Totally agree with you about expectation of future cash flow driving investment return....But where does the availability of stock (supply) and demand play a role?....Could in a higher demand (and relatively lower supply) period of time..that stock prices would rise regardless of increases in future cash flows (for stocks on an individual basis).. IE., the liquidity-driven market... In my mind, increases/decreases of future cash flow does drive investment return RELATIVE to other investment ops (ie. of the % distribution of all funds going to stocks, what % a particular stock will get)....but supply/demand factors can raise the entire market (without an increase in future cash flows) and even raise a stock's price on an individual basis (internets)...many of which, of course, will be in trouble when the supply of their stock increases, or possibly before (the perception that the promised future cash flows won't be realised..Amazon?) Let me know if I'm not clear here..Your thoughts?