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

To: Patrick E.McDaniel who wrote (131242)	6/4/1999 11:08:00 PM
From: Mohan Marette	Respond to of 176387

Pat:Kinda make sense don't it.Now as an aside Red Hat is going public soon, keep an eye on it if you are interested,should be interesting to say the least. Buying Red Hat should be like buying Intel,Dell,IBM,Compaq the whole works.

To: Patrick E.McDaniel who wrote (131242)	6/4/1999 11:20:00 PM
From: stockman_scott	Respond to of 176387

Pat: Thanks for sharing the Article....I really like the following Fool Perspective... <<...an even more compelling explanation for Dell's relatively low P/E back in 1997 was that the market was consistently underestimating the degree of leverage in Dell's business model, leading to understated future cash flow projections. Two years and 700% in share price appreciation later, the market has finally gotten Dell's story straight. Toss in Dell's virtually unrivaled ability to regularly spit out two dollars for every dollar of capital invested in the business and we are well on our way toward explaining Dell's current P/E, I think.>> I would love to see the Fool writers compare CSCO and DELL -- and I may email them and challenge them to do that. Both of these firms lead in their fields. Yet, who is growing sales and earnings faster? Who is given a higher forward P/E? Why does the $20 Billion Janus 20 Fund still seem to have as much in DELL as in CSCO? Hmmm....they must know something about DELL's future potential.<GG>.!! If DELL was "dead money" they would have given up on it a long time ago. The Janus 20 Fund is a great high performance machine and is very careful about screening investments. They also have a reputation to protect. It will be interesting to see if they continue to outperform the other large Growth Funds in the next few years. Best Regards, Scott

To: Patrick E.McDaniel who wrote (131242)	6/5/1999 12:14:00 PM
From: mugicha	Read Replies (1) \| Respond to of 176387

Dell is growing at 45% a year while Intc is growing at 20% a year. So what is the point? Is Mohan suggesting that Intc and Dell both should have a similar forward PE ratio? Maybe I am missing something here, but this appears to be a naive comparrison. Regardless, I'm buying both stocks at todays prices. Both Intc and Dell present good value, but IMO Dell is a more compelling buy at 34 than Intc at 53. A year from now Dell will be above 70 while Intc will climb to about $85. If anyone disagrees, let's check back in a year and compare notes.

To: Patrick E.McDaniel who wrote (131242)	6/5/1999 10:49:00 PM
From: D. Plen	Read Replies (1) \| Respond to of 176387

Re. INTC vs DELL: I too have often pondered the variation in P/E between Intel and DELL. Shouldn't INTC trade at a higher ratio than DELL, after INTC makes the brains, and DELL sells the boxes? Intel comes up with the technology and DELL and all the other computer makers basically assemble standard parts and ship em out the door. The reason clearly must be related to growth and growth potential. INTC CPUs dominate the market and growth is by-and-large limited to the growth in the PC sector, which we know to be about 15% YOY. Admittedly they make lots of other stuff besides CPUs, but most of their revenue and profit comes from selling CPSs. This places somewhat of a ceiling on their growth prospects. DELL on the other hand has a market share of only (~9%) that keeps on increasing. They can increase their revs faster than the overall PC sector, because they are expanding their market share. As long as this happens, and they grow faster than the sector in general, they will have faster earnings growth than the overall market, and Intel, by extension. That explains the preoccupation with general and overall earnings at Dell. If their growth rate is 2-3 times greater than the sector, they merit a higher P/E than the group. D. Plen

To: Patrick E.McDaniel who wrote (131242)	6/5/1999 11:25:00 PM
From: Bill Fischofer	Read Replies (1) \| Respond to of 176387

Re: INTC vs. DELL PE The reason for INTC's relatively low valuation is that INTC must invest billions each year to support its investment cycle. Most folks know about "Moore's Law" which states that the number of transistors on a chip doubles every 18 months. But Moore also has a "second law" which states that the cost of a semiconductor fab doubles for each generation of chips. Despite INTC's position as the dominant semiconductor company, these huge (and growing) investments result in the market demanding a higher "risk premium" (i.e., lower PE) than alternative investment which do not have such capital requirements.