Trading DELL (Archive)

  • Posted: 25 August 2006 08:59 AM

    DELL keeps extremely stable at 21,75. I wonder if that is the share buyback program in action, or everyone being confident it will protect. What do you think?

         
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    Posted: 25 August 2006 09:02 AM #1

    I think there are far too many people who just completely misunderstand what’s going wrong at DELL, and can’t believe that this could mark the beginning of a new downturn and not a bottom. There are too many lazy people who won’t do the maths, and won’t accept that both the dynamics of the market, and the PC industry, have changed beyond recognition over the last 5 years. DELL could well bounce up to 26 or so from here, but I think longer-term (especially after the next earnings report), its just got to go lower.

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  • Posted: 25 August 2006 09:18 AM #2

    [quote author=“Tommo_UK”]...(especially after the next earnings report)..

    Don’t you mean a bit sooner,  after the next earnings warning, Tommo? LOL

    I don’t quite know what’s going on with those execs leaving Dell for Lenovo in the far east, but I thought that was their growth market, which is “compensating” for their domestic difficulties. Knowledge of Dell’s Far East operations is now inside Lenovo, who must have an advantage as a domestic manufacturer, still able to use established IBM brands and superior designs.

         
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    Posted: 25 August 2006 09:23 AM #3

    [quote author=“sleepygeek”][quote author=“Tommo_UK”]...(especially after the next earnings report)..

    Don’t you mean a bit sooner,  after the next earnings warning, Tommo? LOL

    Well, DELL gave no guidance for the next quarter, so I’m not sure they can warn, having not given a target they can miss rolleyes

    You’d think that alone would be enough to make the Street run a million miles, but no..

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  • Posted: 25 August 2006 09:48 AM #4

    [quote author=“Tommo_UK”]Well, DELL gave no guidance for the next quarter, so I’m not sure they can warn,

    oops - forgot that. I think it’s going to be really bad.

    Lenovo will, if necessary (it won’t be), buy back their home market. Dell will have no-Vista-yet weak sales, and AMD product introduction problems, and a big loss of high margin sales to Apple and HP, plus a loss of margin on Intel product. Intel will do what’s neccessary to convert their CPU overstock into an AMD CPU overstock. Dell have taken on extra staff (=overhead) to deliver better service, and they’ll be forced to advertise and discount even more heavily to keep the volumes they need. Yes, it’s going to be bad.

         
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    Posted: 25 August 2006 09:52 AM #5

    Not to mention the huge loss of laptop sales to Apple for back-to-school smile

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  • Posted: 25 August 2006 10:05 AM #6

    I thought DELL was due to fall down to $18 after their annoucemnent. Since there is no more news to expect before november it is better to wait for any shorting unless by chance DELL fly up >$25

         
  • Posted: 25 August 2006 10:07 AM #7

    Maybe MS should buy Dell then have their own hardware to put Vista on. 50 billion market cap and heading lower.

    Seriously, Dell is a GOOD short imho. But waiting for the next shoe to drop may be the way to go. Dell has to get some positive news out to analysts who do understand even if the public do not. Firing Rollins with the announcement that Michael Dell is returning to run the company a la Steve Jobs in the 90’s would jolt the stock upwards and then it would be a GREAT short.

         
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    Posted: 25 August 2006 10:12 AM #8

    [quote author=“Hamourabi”]I thought DELL was due to fall down to $18 after their annoucemnent. Since there is no more news to expect before november it is better to wait for any shorting unless by chance DELL fly up >$25

    I’ve a tight stop in case DELL starts to bounce, but I think there could easily be bad news to come well before November. What if some sharp analyst does a report on how MacBooks are the hot ticket for back-to-school buyers, and DELL is the once losing the sales? What if another sharp analyst spots that DELL desktops are now overpriced compared to their peers, now that all the coupons, fire sales, and other artificial discount mechanisms are being removed. What if another eagle-eyed analyst works out that DELL needs to post double-digit earnings growth for the rest of the year, and next, to justify its PE, and currently it is being forecast to manage just about 8%?

    I don’t know whether there are as many as four such sharp-witted analysts on Wall Street rolleyes .. but it wouldn’t take more than one report like that to whip away the fragile floor DELL has put in.

    DELL is below its multi-month downtrend, its 20-day MA at 20.84, its 50-day MA at 22.54, and seems to be consolidating its losses before resuming its downtrend unless there’s some news of fundamental importance to pull in the longs. I don’t see that happening, but its something to be very careful of, for sure.

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  • Posted: 25 August 2006 10:27 AM #9

    [quote author=“SNIPUS”]Maybe MS should buy Dell then have their own hardware to put Vista on. 50 billion market cap and heading lower.

    Seriously, Dell is a GOOD short imho. But waiting for the next shoe to drop may be the way to go. Dell has to get some positive news out to analysts who do understand even if the public do not. Firing Rollins with the announcement that Michael Dell is returning to run the company a la Steve Jobs in the 90’s would jolt the stock upwards and then it would be a GREAT short.

    I truly don’t think Michael Dell will do that. He knows he can’t fix it, so why should he take the blame? Although he apparently shares an office with Rollins, so he can’t really say he doesn’t know what’s going on day to day!

    As regards MS buying Dell or AMD, both such actions would immediately polarise the industry, and create enemies for MS. No way will they do it. If they do, it’s time to short MS too. It would be MS declaring to the world that they have lost their monopoly.

    Even though Dell or MS may have a losing hand to play, they will still play it out, just as Apple did fifteen years ago.

         
  • Posted: 25 August 2006 10:35 AM #10

    [quote author=“sleepygeek”][quote author=“SNIPUS”]Maybe MS should buy Dell then have their own hardware to put Vista on. 50 billion market cap and heading lower.

    Seriously, Dell is a GOOD short imho. But waiting for the next shoe to drop may be the way to go. Dell has to get some positive news out to analysts who do understand even if the public do not. Firing Rollins with the announcement that Michael Dell is returning to run the company a la Steve Jobs in the 90’s would jolt the stock upwards and then it would be a GREAT short.

    I truly don’t think Michael Dell will do that. He knows he can’t fix it, so why should he take the blame? Although he apparently shares an office with Rollins, so he can’t really say he doesn’t know what’s going on day to day!

    As regards MS buying Dell or AMD, both such actions would immediately polarise the industry, and create enemies for MS. No way will they do it. If they do, it’s time to short MS too.


    I think history will say Dell saw the writing on the wall and bailed. Rollins is just a whipping boy. No one, even Lee Iacocca, could have saved that business model
    Re MS they don’t have any friends as far as I can see. Just ask iRiver, Creative and the other iPod wannabe OEM’s.

         
  • Posted: 25 August 2006 10:46 AM #11

    I’m glad somebody else started a Dell topic. I was concerned I had started too many.

    The cause of the stable price (for now) IMHO is denial. The balance sheet is a mere shadow of its past and there isn’t enough cash remaining to maintain an agressive repurchase plan (unless the company moves heavily into debt).

    Watch for a move south as we hear toward quarter end. Unless the company comes up with a convincing “story”, insitutions won’t want it on the books for the reports to shareowners.

         
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    Posted: 25 August 2006 11:59 AM #12

    [quote author=“SNIPUS”]
    I think history will say Dell saw the writing on the wall and bailed. Rollins is just a whipping boy.

    If that’s the case then why did Michael Dell buy $70M of stock on 24 May?

    The price has fallen 10% since then. :bugeyed:

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  • Posted: 25 August 2006 12:04 PM #13

    [quote author=“wheeles”][quote author=“SNIPUS”]
    I think history will say Dell saw the writing on the wall and bailed. Rollins is just a whipping boy.

    If that’s the case then why did Michael Dell buy $70M of stock on 24 May?

    The price has fallen 10% since then. :bugeyed:

    A lot of money to be sure but he is a multi billionaire.  Also lots of bankers and big time backers in this pig and they may have threatened to bail. Just a wild guess on my part….

         
  • Posted: 25 August 2006 12:25 PM #14

    [quote author=“wheeles”]If that’s the case then why did Michael Dell buy $70M of stock on 24 May?

    token gesture, just like MS “saving” Apple with $150M. I believe his holding is around $5BN isn’t it? (net worth about $20BN). Scale that down to your net worth to get a feel for what it means to him.

    And of course we don’t know what derivative products he is holding; very likely he has a collar on his holding via options.

         
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    Posted: 25 August 2006 12:53 PM #15

    [quote author=“sleepygeek”][quote author=“wheeles”]If that’s the case then why did Michael Dell buy $70M of stock on 24 May?

    token gesture, just like MS “saving” Apple with $150M. I believe his holding is around $5BN isn’t it? (net worth about $20BN). Scale that down to your net worth to get a feel for what it means to him.

    And of course we don’t know what derivative products he is holding; very likely he has a collar on his holding via options.

    That’s true. So, it could well have been a face-saving gesture with no real cost to himself.

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    Throughout all my years of investing I’ve found that the big money was never made in the buying or the selling. The big money was made in the waiting. ? Jesse Livermore