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

To: Mohan Marette who wrote (112858)	3/27/1999 1:34:00 PM
From: HeyRainier	Read Replies (1) \| Respond to of 176387

Wow! Those were some excellent posts Mohan (and thanks to you too, Chuzzlewit). Thanks very much for taking the time to dig up the explanations. I'm a recent Dell investor, being attracted actually by its ROIC, market position, and some Technical signals that suggested a window of opportunity had arrived. I have been reading the last 400 posts to get a better grasp of the economics at work here, and it seems that there is a good balance being presented as to the merits and potential shortcomings of being a Dell investor. As part Technical-trader, I see a declining trend in stock price that has exceeded the usual weakness that Dell tends to experience in the course of its regular ups and downs. While the longer term Primary trend is still intact (e.g. the price remains above multiple term moving averages), I can only wonder to what extent the shorter term negative trend has fully discounted the possibility of a weaker earnings structure. There may be more to come, but the price has approached some levels of support that suggest a firmer price base in this vicinity. As part Analyst(CFA)-in-training, I can see that it is no secret that Dell is one of the most efficient businesses out there that so far has been able to sustainably produce high incremental returns on capital. Link that fundamental characteristic with its historical stock returns (I would assume that there is a potentially strong positive correlation here), and one immediately gets attracted to the Dells and Ciscos for their efficiency. As part Value Investor, well, that P/E doesn't comfort me, and it definitely takes me beyond my traditional boundaries. But I'm beginning to see that beyond the traditional 'value benchmarks,' there is indeed value that is structurally ingrained within a well-run and efficient operation with competitive advantages. As an aside, I feel that Compaq's failure to deliver through the direct model, and its subsequent discomfort in embracing it, is a strategic error that will likely cost it its lead position in the industry--likely to Dell--in the future (whether that is a now-biased statement or not, I cannot be certain any longer). As part Gorilla-game Investor, Dell seems to be the Gorilla that has embraced the 'Discontinuous Innovation' such as the Direct Model that has given it the lead role in its field. Indeed Michael Dell, like he states in his book, is akin to Wayne Gretzy, "...(who) once explained his success by saying that he didn't skate to where the puck was, he skated to where the puck was going to be." (pg 209) Right now though, the human, risk-averse side of me, needs to understand that 'sitting on one's hands' is perhaps the best course of action to take at this time, at least until fundamental developments of a more serious nature occur. Regards, Rainier