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Politics : Ask Michael Burke -- Ignore unavailable to you. Want to Upgrade?

To: Earlie who wrote (47996)	2/19/1999 3:53:00 PM
From: Eggolas Moria	Read Replies (2) \| Respond to of 132070

Another tidbit on DELL: Dell isn't the average stock by any means -- but it now looks more average than it did in mid-1998. That should mean a contraction in the multiple that investors are willing to pay for the stock. A few weeks ago, Prudential Securities had calculated that Dell would be worth $107 a share in February 2000, based on a multiple of 53 times projected 2001 earnings of $2 a share. Now the investment firm's price target is $90 a share, based on a multiple of 45 times projected earnings. Dell is now seen on Wall Street as a company that can stumble. The aura of perfection -- an impossible burden for any company -- is now gone. At a multiple of 45, Dell still commands a substantial premium of about 50% to the market P/E ratio of 31.2. And some analysts want to punish the stock more severely; Donaldson, Lufkin & Jenrette has suggested that the multiple will contract to a range of 35 to 40. That results in a 12-month price target of $70 to $80. These are all projections, and every single one of them could be wrong. But even if they are, I think these numbers are likely to weigh on the stock at least through April. Wall Street now expects that Dell will have to cut prices and lower margins, and that growth is slowing. The April quarterly report is likely to confirm those opinions since Dell has said that it will compete more aggressively on price. The company will have to prove these projections wrong with some hard numbers before Wall Street analysts are willing to raise their multiples back to the levels Dell saw in 1998. Dell is now seen on Wall Street as a company that can stumble. The aura of perfection -- an impossible burden for any company -- is now gone. From Moneycentral/Jubak moneycentral.msn.com