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

To: JRH who wrote (125014)	5/15/1999 4:27:00 PM
From: Grandpa Joe	Respond to of 176387

Hi JRH: I agree with a lot of what you said. I do however differ with you in two areas. IBM's pc business lost about $1B last year and was still losing money last quarter. You are correct that IBM could use the pc business as a loss leader and make it up on service, but this is not what Lou G. is planning on doing. In several speeches Lou has described IBM as focusing on its profitable businesses; service and components. It makes a lot more sense to eliminate IBM's pc business and replace it with more service contracts with other pc manufacturers, such as Dell. It makes more sense to sell profitable components like storage to a few big pc manufacturers, and guarantee your margin, than to rely on the fickle retail end user. This is strategically smart and Lou's no dummy. As far as valuation I would argue that Dell is already discounted. If you look at its forward P/E, its in the 40s. Yet the most conservative estimate is that Dell will grow at 35%. If you look at PEG. Dell is a better value then IBM. Will Michael rest on his laurels? No, he is already looking beyond e-commerce and is focusing on broadband technology. Long term I can count on "Death...Taxes" and MSD executing. JRH, thanks for your thoughts. I enjoyed reading them. Gramps