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Company: Dell (DELL)
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30%
agree
23 votes

  Adamo vs. MacBook Air

Dells appears to be coming out with a new, ultraportable laptop to take on Apple's MacBook Air.

http://www.pcadvisor.co.uk/news/index.cfm?RSS&NewsID=108743

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20%
agree
24 votes

  Dell is trading at less than 4 times earnings

I just want to give you an example of how absurdly cheap stocks are right now.

Today, on the back of Intel’s reduced forecast and Goldman Sachs putting them on their Conviction Sell list, Dell traded down to $9 a share.

The first thing is that Dell has $3.78 a share in net cash and short term investments on their balance sheet. That is: Add up their cash and short term investments, subtract their debt, and that’s what they have. That’s money in the bank.

Subtract that from the share price and you get Dell’s business for $5.22. Over the last four quarters, Dell earned $1.34. That’s a trailing P/E of 3.9! That is sick! - as the kids say. Even if earnings get cut in half going forward that’s an 8 multiple. That is absurdly cheap. The stock is just being given away at this price.

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11%
agree
18 votes

  Strength in the Enterprise

Recently the Dell server business has been surging in the US enterprise market. Although large companies say it would be easy to switch from Dell to another vendor they are not because they give Dell top marks in their ability to deliver. Other firms like HP and IBM score higher in technology and other metrics but Dell is gaining share.

There are plenty of moving pieces at Dell but they enjoy strength in their core market while others may be distracted. Michael Dell is serious about getting the company back on track. It is however a recover measured in years not months.

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25%
agree
28 votes

  Non-PC consumer electronics a big opportunity

Dell is expanding into the non-PC segment, which is showing both higher growth rates and higher margins than the PC market. The company is increasing its offerings of servers, peripherals, services, etc., in an attempt to capture share in this budding market segment.

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0%
agree
15 votes

  On Valuation

I have a healthy respect for the stock market as a short term forward looking indicator; it does provide an excellent vision of times to come some six months down the line. But today, I look on the market with contempt. It is a time when smart money behaves dumb; even if the market wide story is true, opportunity is created from sheer stupidity at individual stock level. At present, the market is stupid, it lacks vision. For an investor willing to look beyond his or her nose, there are amazing opportunities. Dell is one. Look at Dell's balance sheet. If you add up its cash, short/long term investments & short term notes receivable and subtract long term and short term debt, you get $9.5 billion. This is over $4.87 per share. Shares outstanding are down from 2,485 million shares at 1/28/2005 to 1,960 million at the end of the most recent quarter closed; that means over 21% of the company has been bought back. During the past five accounting years, based on 1,960 million shares now outstanding, the company has generated free cash flows of $1.12 (Year end 1/30/08), $2.54, $4.54, $2.11 and $0.44 (1/30/04). During the past 6 months it has generated $0.99 in free cash flows. In total over the last 5 1/2 years the company has generated $11.74 in free cash flow. Since it still holds $4.87 per share, roughly $6.87 has been invested in principally in buy backs and acquisitions. This is a pretty amazing record of the ability to create free cash flows. Consider this, if Dell were to start with $4.87 per share in cash and shut shop in 20 years, generating only $0.80 per year, growing at an annual inflation rate of 3%, in free cash flows during those 20 years; using a discount rate of 12% we would arrive at a value of $12.09. If you use a 6.5% discount rate (long term market returns), then value is $16.01. If you look for $2.13 per year (average free cash flows over past 5.5 years) for the next 20 years growing at 6.5% and demand a 20% annual rate of return, the price to pay now is $19.20. Now I think Dell will do growth well over 6.5% per year long term, so this valuation is depression economics. My own view is a growth of at least 10% and an exit to an investor looking for a 15% annualized return once the fear stage is behind us; this gives me an planned 18 month exit price target of $30. If I were Michael Dell, at this point in time, I would ratchet up share buy backs with a view to a leveraged buyout. Listing back after the turnaround is complete would make a second fortune. If this did occur, I would be a sad man; as a shareholder I would lose out on a magnificent opportunity.

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0%
agree
15 votes

  "Dell invented DTC, and it works"

Dell’s direct-to-customer model remains the company’s strongest advantage in the computer hardware market. This model minimizes operating costs while maximizing operating cash flow, providing the company with a superior business model with generally high margins.

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40%
agree
83 votes

  Fiscal first quarter earnings higher than expected

After nearly two years of decline, Dell's earnings are finally on the rise again, with first quarter earnings of 2008 higher than Wall Street estimates. Driving this profit climb include the fact that server sales rose 21% and laptop shipments 43% since Michael Dell took over the reigns as CEO. Daring and costly initiatives such as beefing up product design and innovation techniques, along with a competitive international agenda have bore fruit: Sales in places like Brazil, India, and China have seen an increase of 58% in sales.

The company reported fiscal first quarter earnings of 38 cents a share and revenue of $16 billion against consensus forecasts of 34 cents and $15.7 billion.

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5%
agree
17 votes

  Dell is indeed innovative

Two exciting products that prove what Dell can do:

  • The Dell Crystal Monitor: A 22-inch widescreen flat panel display made of ultra-clear tempered glass, with a 1680 x 1050 high-definition resolution and a 98% color gamut to reveal more shades and tones. It won the highest design honor at the Consumer Electronics Show, the CES Best of Innovations 2008. See it here.
  • The XPS One: An all-in-one computer similar to the iMac, but Windows-based. It features an elegant display with built-in 2-megapixel webcam, integrated Hi-Def sound system, wireless keyboard and mouse, a smoked glass display base, a finished back, and a clean one-cord wire consolidation. See it here.

Dell is "a work in progress" and pointed out, "This is not a short-term fix and we are not in a short-term game."

The Vostro line of notebooks is not supposed to compete with the MacBook Air, but is a gutsy alternative for small businesses that want power and speed in a little package. A review at Laptop Magazine that awarded the Dell XPS M1330 its Editors' Choice designation and said it's "a remarkable notebook for a very reasonable price."

The review concludes: "So let's review: top-notch screen, keyboard, performance, design, portability, and features, all for under $2,000. Sure, it's not as thin as the MacBook Air or ThinkPad X300, but the XPS M1330 has more features than the former and a much lower price than the latter. This is the ultimate sweet-spot notebook for consumers."

Moreover, It spent $152 million on research and development last quarter, which is 7% higher than it was a year ago, so they're working on something.

Even without a technology breakthrough, however, the marginal changes taking place at Dell are good enough to keep earnings growing

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13%
agree
22 votes

  Reining in expenses and buy back deal

Dell’s total operating expenses were $15.2 billion for the quarter ended Feb. 1, while total revenue clocked in at almost $16 billion, leaving less than $800 million in operating income. The company wants to reduce costs by $3 billion by 2011. "I believe we have begun the journey to transform the company," Dell said.Not only is he believing, he’s betting on it. At the same meeting, Chief Financial Officer Donald Carty said the company plans to repurchase at least $1 billion in company stock this quarter. The company bought back $400 million of its stock last quarter. Carty also said the company will draw from capital markets for debt financing.

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10%
agree
20 votes

  Dell invented DTC, and it works

Dell’s direct-to-customer model remains the company’s strongest advantage in the computer hardware market. This model minimizes operating costs while maximizing operating cash flow, providing the company with a superior business model with generally high margins.

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16%
agree
25 votes

  Dell is only a short term buy

Now is a good entry point into Dell. The computer maker is certain to appreciate with the market over the next two months. However, I would not hold on to this stock for too long. Dell is in a very competitive commodity business on the low end. At the high end, Dell depends on corporate spending. Both sides of the business will be pressured through at least 2009, resulting in lower ship volumes and diminished profitability.

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9%
agree
22 votes

  Everyone will buy new PCs to run Vista

The introduction of Microsoft’s new Windows Vista operating system should trigger an upgrade cycle in Dell’s higher-margin commercial segment. As companies upgrade or replace their computer systems to meet Vista’s compatibility requirements, Dell stands to benefit from increased demand.

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