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

To: OLDTRADER who wrote (105704)	2/28/1999 11:26:00 AM
From: JBird77777	Read Replies (2) \| Respond to of 176387

Dell Stock: Beyond Wildest Dreams This is 10 days old so may have been posted before, but in case it hasn't: usatoday.com 02/18/99- Updated 10:03 AM ET Dell stock: Beyond wildest dreams By David Henry, USA TODAY NEW YORK -- One of the few stories more intriguing right now than Dell Computer the company, or Michael Dell the entrepreneur, is Dell the stock. Dell the company has multiplied its annual revenue more than five-fold the past five years to $18.2 billion from $3.5 billion by assembling and selling PCs. Earnings per share have grown at a 94% annual rate during the same period, calculates I/B/E/S. Dell holds only six days of inventory yet usually satisfies customers. Its $3.2 billion cash pile is growing with the help of low expenses selling directly to users. Return on shareholder equity is an amazing 75%. Then there's the legend of Michael Dell. At age 13 he was running a mail-order stamp-trading business. He dropped out of college when his computer component business outgrew his dorm room. And, now the week before he turns 34, he owns $16.6 billion, or 16%, of Dell, the stock. But it is the stock's story that is beyond imagination and that illustrates much about Wall Street today. The shares are up 4,200% the past three years. People who owned Dell throughout can't believe their good fortune. People who never have can't get over that either. The kicker in the stock's story is its surge and retreat the past five weeks from $79 on Jan. 15 to a record close of $108 5/8 (and 100 times reported earnings) on Feb. 2 and back down to $81 9/16 Wednesday. Amazingly, nothing changed dramatically about the company's outlook as shares soared 38% and plunged 33%. Sure, the headlines and analysts proclaimed that Dell made news by reporting late Tuesday that revenue grew only 38% instead of the 50% achieved in the past. The shares lost 7 3/16 Wednesday and had lost 1 1/8 Tuesday and 12 on Friday in anticipation of the report. But investors knew, for months, if not longer, that revenue growth would eventually slow. And they knew the growth in earnings would slow from 64% in the most recent year to a still sparkling 35% or so. The smaller percentage gains are inevitable as Dell becomes larger. They're also inevitable because Dell does not have a patent on its business. Competitors, though surely sloppy initially, are imitating Dell's direct sales. They'll bring the company's performance down to merely outstanding. So if Dell's destiny was obvious, why did the shares shoot up so? What does the spectacle show about the market? "It tells you there is a lot of money out there and people don't know what to do with it," says John Manley, strategist at Salomon Smith Barney. The money has come from last fall's record-low interest rates and the faith in stocks that attracts money to stock mutual funds. But money managers, lacking confidence in the ability of most stocks to help them keep pace, have concentrated on buying shares that have done well and are blessed with the prospect of above-average earnings growth. Dell, along with Microsoft, Cisco and Intel, may be the epitome of such stocks. "This was a tribute to momentum investing," Manley says. Adds Stuart Freeman , strategist at A.G. Edwards: "A lot of capital is piling up in fewer stocks and from time to time you're going to have an upset. " A key change in the month of Dell's rise and fall was that interest rates rose, notes Byron Wien of Morgan Stanley. The yield on 10-year Treasuries climbed from 4.68% Jan. 15 to 4.97% Wednesday. Higher rates cut more deeply into stocks priced for high earnings growth, stocks like Dell. "Since rates have moved up," Wien says, "even good news is punished if better news was expected." Note that Dell ranks 20th in market value in Standard & Poor's 500-stock index. Dell wasn't added to the S&P until Sept. 1996. Tech stocks have grown from 11% of the S&P in 1994 to 20% in 1998, the biggest increase by a sector since the run-up of oil stocks in the 1980s, Wien says. Manley doubts techs will suffer the same fall as the oils. He recommends holding a bigger stake in techs than is in the S&P. The industry will grow in importance, he says. Just be ready for more Dell-like price swings along the way. --------------------------------------------------------------------------------

To: OLDTRADER who wrote (105704)	2/28/1999 4:20:00 PM
From: Catcher	Read Replies (1) \| Respond to of 176387

dude, i know you're smart cause you don't accumulate your kinda bread w/out some brain power...but please show SOME tolerance for the POSSIBILITY that there MIGHT be a better place to park some $s for a month or two. we agree dell is good long term hold, right? some people prefer different investment style that looks at shorter timeframe. cpq is thread with reputation for intolerance to anything but cheerleading...don't think we want that here.