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

To: dovan do who wrote (122891)	5/6/1999 7:45:00 PM
From: stockman_scott	Respond to of 176388

Thanks for posting the link the balance sheet article. I really liked the following passage... <<With these numbers in mind, let's consider the so-called "New Economy" companies out there. What are their cash conversion cycles? How do they compare to Caterpillar? While I don't necessarily endorse the current valuations of many of the so-called "Internet" stocks, we may at least get a sense of why these companies' shares prices have grown so tremendously in recent years when we look at some of these measures. Dell (Nasdaq: DELL), for example, is the best-performing stock of the decade. Looking at some of the metrics we discussed last week, we find that Dell actually has a negative cash conversion cycle, primarily because of its quick inventory turnover. Here's what the numbers look like: Dell's 1998 Days Sales Outstanding was 41.09, only slightly better than Caterpillar's 47.6, but Dell's Days in Inventory was 7.05, while Caterpillar's was 69.01. That's a pretty amazing difference, obviously. Caterpillar sells all its inventory 5.29 times a year, while Dell does so 51.78 times per year. Of course, the products each company sells make some of the difference. That's why comparisons within an industry are the most relevant. But Dell's super-fast inventory turnover is still noteworthy: even though Dell and Caterpillar actually had very similar revenues in 1998 ($19.97 billion for Caterpillar, excluding its financing business, vs. $18.24 billion for Dell), Dell had only $273 million in inventory by year's end, while Caterpillar had more than ten times as much, at $2.84 billion. Thanks to Dell's quick inventory turnover, its cash conversion cycle in 1998 was -5.04, while Caterpillar's was 43.99. In essence, Dell gets cash before it sends out its finished product. No wonder it's the best-performing stock of the decade! Once we understand Caterpillar's more traditional business model, we can see a little more clearly why companies like Dell have received the attention they have.>> Well, maybe some of the Value Fund Managers need to do some more homework <gg>...They should read this article carefully for starters..!! Best Regards, Scott

To: dovan do who wrote (122891)	5/6/1999 8:35:00 PM
From: Mohan Marette	Read Replies (2) \| Respond to of 176388

Dell & Negative Cash Conversion Cycle. dovan: I don't think that was quite fair to compare CAT and DELL,entirely different biz,I guess they just made the comparison to illustrate a point so we will forgive the Fool this time.<g> ' Thanks to Dell's quick inventory turnover, its cash conversion cycle in 1998 was -5.04, while Caterpillar's was 43.99. In essence, Dell gets cash before it sends out its finished product. No wonder it's the best-performing stock of the decade! Once we understand Caterpillar's more traditional business model, we can see a little more clearly why companies like Dell have received the attention they have.'... I thought Dell's cash converstion cycle was -12,may be Paul will straigten us out on that.