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Strategies & Market Trends : The Thread Formerly Known as No Rest For The Wicked -- Ignore unavailable to you. Want to Upgrade?

To: Glenn who wrote (19682)	3/25/1999 2:01:00 AM
From: Junkyardawg	Read Replies (1) \| Respond to of 90042

Glenn Read this biz.yahoo.com someone on yahoo thinks they are talking about Fore. Your opinion? dawg

To: Glenn who wrote (19682)	3/25/1999 2:31:00 AM
From: mchip	Read Replies (2) \| Respond to of 90042

Dell. I hope the selling is done, it sure looks like it. I still think Dell's gigabuys store it going to be an upside supprise.

To: Glenn who wrote (19682)	3/25/1999 8:17:00 AM
From: backman	Read Replies (3) \| Respond to of 90042

glenn: from greenberg at thestreet "Dinging Dell -- again: Hey, I know you're sick of hearing about Dell (DELL:Nasdaq). I'm sick of writing about it. But when an independent researcher who has credibility with this column issues a report explaining why he thinks Dell (which he is short) is going lower, this column would be remiss in not reviewing the reasons why. (Dontya think?) The researcher is Tom Chanos of Badger Consultants in Madison, Wis., who has been quoted here in the past on Data Transmission (yep, the same wacky one in the above saga.) Like most Dell shorts, he acknowledges that Dell is a fine company that has done an excellent job executing its strategy. "The problem is that a lot of people are looking in the rearview mirror," he says. "I'm looking at future growth." His key points include: A dramatic slowdown in revenue growth. "The law of large numbers is starting to catch up with Dell," Chanos says. He's estimating that Dell's first-quarter revs will be close to $4.35 billion. That translates into a 36.5% year-over-year gain, its lowest in at least three years. "For any company this would be good growth," he says. "However, Dell used to grow revenue year after year in the 50% to over 60% range." Worse yet, he adds, "the direction is down and it appears to us that it will continue to go down." A dramatic slowdown in earnings growth. Hasn't happened yet, but with more competitors entering Dell's space, Chanos believes margins could come under pressure. His first-quarter EPS of 15 cents per share would translate into a negative 3.2% sequentially. Chanos says that would be Dell's worst showing in 13 quarters. It would also be a 36.4% year-over-year gain, the lowest in three years and half the rate of six months ago. "If earnings are going to grow at half the rates in the past then surely the P/E ratio could fall in half as well," he says. A slick slide in selling prices, especially sub-$1,000 machines. "These machines are flying off the shelves, and they're putting enormous downward pressure on average selling prices," Chanos says. He figures Dell would have to do $7.7 billion in revs by the fourth quarter just to reach a growth rate of 50%. "That is more than they did in all of 1997," he says. "With ASPs falling every quarter, Dell has to increase its unit sales by 50% year over year every quarter just to get 35% revenue growth. At some point soon, they will not make it." If he's right, Chanos thinks Dell could slip to 25 in six to 12 months. It closed yesterday at 38 1/2. Dell won't discuss valuations, but a Dell spokesman says the only reason the company's revenue fell was because the company was too conservative in its bidding. "In retrospect, our net margin was too high," he says, adding that the company could have been more aggressive going into the fourth quarter when bidding for business. "Had we been more aggressive, in retrospect, we could've driven more top-line growth." He also reiterated earlier statements that Dell will quit adding personnel and building its infrastructure at the same pace its revenues are growing. What about earnings coming under pressure as other PC makers switch to the Dell-direct model? The spokesman says Dell currently sells fewer than one system out of 10 sold worldwide, and that Dell's competitors are still mostly doing business the old-fashioned way. "Even if you allow that others are making their business models more efficient, to suggest they're encroaching on Dell is to suggest that Dell is stagnant and that's a foolhardy suggestion." As for the law of size catching up to Dell, the spokesman says a company exec recently addressed that very issue and agreed that at some point that'll happen, "but when? You don't see $12 billion companies growing at 50%, but we did." Finally, on the issue of falling prices, the spokesman says sub-$1,000 is no longer the low-end of the market. "And we have said we won't play in the low- end until we figure out how to do it appropriately for our investors ... we won't go into any space without making appropriate returns for our investors." The rest will be history" i think this is one weak market overall and the past week has just been a warm-up....40 pts on the nas? suckers rally....look out below doom and gloom (unless you can short, although with my legs, you don't want to see me in shorts) david