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

To: Sophia Ashley who wrote (113763)	3/31/1999 8:17:00 PM
From: Grant	Respond to of 176387

Interesting comments from clear stations.... DELL has increased over the last few days due to a combination of factors: 1) Abby Cohen NYT comment - I spoke with an embarassed Goldman analyst who admitted that Abby's comment regarding DELL's valuation relative to the market was INACCURATE! She used the then-current price (post-split) and an EPS estimate which had not been adjusted for the split -- THE VALUATION SHE WAS USING WAS ONLY HALF THE ACTUAL VALUATION (about 26x v. 52x FY00 Est EPS)! If you don't believe me, do the math yourself. The analyst said not to expect a retraction. Abby IS a BULL on DELL and DELL is on GS's Recommended List. I also tried to call the NYT to ask them to clarify, but callers get routed thru a message maze and never get to talk to anyone. 2) Q-end window dressing - even though it hasn't done well recently, it's a name people know, so money managers are adding for now. I had expected further weakness in DELL which would have made it less attractive for Q-end. 3) Analyst meeting next week - DELL stock typically rises ahead of its analyst meeting, results afterward are mixed 4) No preannouncement from CPQ - CPQ didn't need to preannounce since they have already gotten analysts to lower the outlook without doing so directly. The stock may get another week of upward movement in anticipation of the analyst meeting. Thereafter, DELL will move based upon what is happening with their revenues. A Paine Webber report on CPQ dated 3/24/99 provides additional support for a post-Y2K related slowdown in PC sales, particularly with regard to SMBs. I maintain my conclusion that corporate buyers are also paring back PC purchases for the same reason. A report out from the government yesterday stated that govt agencies are 90% complete with Y2K upgrades/testing. Consumer growth in PC purchases is primarily coming from white boxes. DELL's fastest growth market, Europe, is slowing, confirmed by IDC, etc. I see one of three possible outcomes over the next 7 weeks before DELL releases estimates: 1) Sales are falling short of estimates and DELL comes clean next week because delaying bad news would cause even greater pain later due to the crediblity issue - stock tanks 2) Sales are weak, but not awful, so DELL hedges and convinces analysts that things are OK using words like 'healthy', 'meeting DELL expectations', etc. and talking more about growth in smaller revenue markets and their future than what is happening now in big markets -- stock continues in the $35-45 trading channel of the last several weeks until the actual results are released 3) Sales are actually meeting or exceeding expectations and the company hosts a very positve meeting resulting in analyst upgrades, etc. -- stock takes off I still think that 1) or 2) is the most likely in the near term and that revenues will disappoint in May. Accordingly, I am still BEARISH on DELL and the PC sector. I believe the factors supporting the stock currently are short-term in nature and that industry/DELL fundamentals will cause further decline in the intermediate term. As stated above, if the analyst meeting is very bullish as in 3), I would rethink my BEARISH stance for the near term.