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Dell (DELL): FQ1 EPS of $0.43 misses by $0.03. Revenue of $14.42B (-4% Y/Y) misses by $490M....

Dell (DELL): FQ1 EPS of $0.43 misses by $0.03. Revenue of $14.42B (-4% Y/Y) misses by $490M. Expects FQ2 revenue of $14.7B-$15B, below $15.4B consensus. Shares -7.5% AH. (PR)
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Comments (9)
  • Joe Razorback
    , contributor
    Comments (281) | Send Message
     
    WOOHOO. $15 Puts Gonna Pay Tomorrow!!!!!
    22 May 2012, 04:08 PM Reply Like
  • Joe Razorback
    , contributor
    Comments (281) | Send Message
     
    OH and $21-$20 Put Spreads on HPQ are looking mighty fine also after buying them high yesterday.
    22 May 2012, 04:09 PM Reply Like
  • dr_randevil
    , contributor
    Comments (173) | Send Message
     
    you're so smart
    22 May 2012, 05:02 PM Reply Like
  • Joe Razorback
    , contributor
    Comments (281) | Send Message
     
    Thanks Dr. Doofus
    22 May 2012, 05:39 PM Reply Like
  • dr_randevil
    , contributor
    Comments (173) | Send Message
     
    you are welcome.
    23 May 2012, 06:54 PM Reply Like
  • Archman Investor
    , contributor
    Comments (2909) | Send Message
     
    Yep. Here we go again.
    Another dead end, yesteryear former bull market winner that Wall Street tries to pump even to this day.
    I just do not understand how anyone could still be invested in Dell.

     

    It must be the complete and utter brainwashing by Wall Street, or maybe it is just the buy and hope mentality. Or maybe people truly have no idea what investing means and rely solely on what Wall Street is pumping.

     

    What a dead end waste of money.

     

    The year 1999 is over. Dell is done. The former bull market ended 12 years ago. 12 years.
    22 May 2012, 09:10 PM Reply Like
  • Matt Blecker, CFA
    , contributor
    Comments (172) | Send Message
     
    Archman,

     

    Why invest in Dell today?

     

    Because it is RIDICULOUSLY cheap. Absurdly cheap. It has not performed well the past 12 years because it was RIDICULOUSLY overvalued, pretty much until the credit crisis occurred. Dell sold at a premium multiple to the market until 2008.

     

    Now the company has about $5 per share in cash. Net of the cash you can buy the firm today at roughly 4-6x earnings. The firm is smartly transitioning into a full IT services provider. A significant portion of the profit comes not from PCs but from Services, self-branded rather than third party storage systems, servers and networking, and will eventually because of newly added acquistions, come from software and cloud offerings.

     

    In terms of Wall Street, they are basically dumping the stock and are overly cautious and impatient.

     

    I bought a small position in Q4 2011 and intend to add today.

     

    Buying today and practicing patience is how you generate solid long-term returns with much less risk of permanent impairment of capital.

     

    Salesforce.com has a higher enterprise value than Dell and producces no GAAP earnings and very little free cash flow. Dell will likely produce $4 billion of FCF this year and carries an enterprise value of just over 15 billion, equating to a FCF yield of about 25%!
    23 May 2012, 08:46 AM Reply Like
  • Archman Investor
    , contributor
    Comments (2909) | Send Message
     
    Matt:

     

    I agree. You are making all great points.
    I even read your comments again. Each point you brought up made 100% perfect sense.

     

    And yet, Dell is doing nothing. Their stock has been dead for years.
    Dell stock was $20 back in 2000. It is $15 today. 12 years later.

     

    All those points you spoke of sounds great. They make for a great CNBC appearance if you were making one. They mean nothing now.

     

    Dell is an over owned former Wall Street bull market winner. William O'Neil has done tons of research that proves that the majority of former bull market winners rarely ever go on to outperform in the future.

     

    If all those points you brought up were valid, why is the stock so cheap? It is cheap for a reason. The points you brought up are only "part" of an overall investing equation.
    Studies have shown that 75% of all stock price movement are due to investor psychology not fundamental reasons. Dell is looked at as a former winner. A broken commodity play on desktop computers. They have no innovation. They are not breaking any new ground. Apple is probably one of the few companies that has so in the past decade, hence that is why they are where they are.

     

    Perception is everything to investing.

     

    Again, all those fabulous Wall Street figures you presented are great, but they are simply good for CNBC talk. Not making money.

     

    I wish you the best.
    23 May 2012, 09:18 AM Reply Like
  • Matt Blecker, CFA
    , contributor
    Comments (172) | Send Message
     
    Archman,

     

    At one point I believe Dell was $60 per share. Extremely overvalued. Do I think it will reach that point again. If so, not for a very long time. But not much has to go right for Dell to be a $25-30 stock 3 years from now, which is a nice return with little risk IMO at these levels.

     

    Perception may be everything in the short-term but fundamentals and valuation matter more over the long-term.

     

    The tech crash is a perfect example. Tech stocks outperformed in 1995, 1996, 1997, 1998. 1999, until 2000. They became more overvalued each year. While other stocks like Altria performed miserably. However, eventually, reversion to the mean occurred. It may take 3-5 years, but eventually, it occurs.

     

    Dell did not become a good buy IMO until the credit crisis in late 2008 and was not really cheap on both an absolute and relative basis until last year.

     

    Just as happened with the tech crash in 2000, overvalued stocks like Chipolte, Linked In, BJ's Restaurants, etc...will come back down to earth, and cheap stocks like Cisco and Dell will begin to outperform. It may take another 2-3 years, but it will happen.

     

    To expect these stocks to exceed their 2000 highs is unreasonable, but to expect them to perform well from such low levels and eventually reach close to a market multiple again is not asking much.
    23 May 2012, 09:29 AM Reply Like
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