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To: TOPFUEL who wrote (17227)	2/16/1999 10:17:00 PM
From: Andrew H	Respond to of 44908

Well, let's day Dell is currently earning about 1.25/year. And let's say it is going to grow its earnings by about 50%/year, although I doubt it can continue to do that much longer. So we give it a 50 PE on current earnings. That would give a price of 62.50. They will be in a business where the competition will become greater and greater. I think they were overpriced. But they have been very successful and have a great business formula, so they are worth some premium to the normal PE. 75 seems more than a fair price to me. After all, unlike MSFT or INTC, they don't create new products. They just put pieces together, although they do a brilliant marketing job.

To: TOPFUEL who wrote (17227)	2/16/1999 10:17:00 PM
From: Andrew H	Respond to of 44908

Well, let's say Dell is currently earning about 1.25/year. And let's say it is going to grow its earnings by about 50%/year, although I doubt it can continue to do that much longer. So we give it a 50 PE on current earnings. That would give a price of 62.50. They will be in a business where the competition will become greater and greater. I think they were overpriced. But they have been very successful and have a great business formula, so they are worth some premium to the normal PE. 75 seems more than a fair price to me. After all, unlike MSFT or INTC, they don't create new products. They just put pieces together, although they do a brilliant marketing job.