Shiv Kapoor

Why Smart Money Should Buy Dell

Walt17 - the value of Dell's supply chain is of prime importance in understanding why Dell creates value and free cash flow. This will deteriorate somewhat as Dell enters the traditional sell through retail segment; however, the deterioration is built into lower expectations of future free cash flows.

This post is not really about Dell's balance sheet, it is about Dell's ability to generate free cash flows. They are succesful because of incredible supply chain management which is perhaps second only to WMT's supply chain. Using the balance sheet to determine liquid reserves is just to identify what they have today which could be invested or distributed; what remains on the balance sheet & payables is a maintainable structural advantage Dell possesses.