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December 30, 1998

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Subject: Re: Is Dell due a split announcement???
Author: kingh

[Footunder asked: Does anyone think Dell is due a split announcement? Didnt they split 2 for 1 the last time they got at this level?]

I don't think the last split slowed down Dell as much as the fact that a prettier girl showed up at the party. And Dell apparently has a habit of experiencing some selling off the day of earnings. People just didn't come back as was custom because of the broken neck they endured when first they spied the beautifully volumptuous Missy Dot Com.

"Once Miss Dot Com opens her mouth...the suitors simply have to turn their attention back to a good woman."

But being a beautiful airhead will only get you so far into the social circle. Once Miss Dot Com opens her mouth (earnings, frustration at the continued inability to post a profit) the suitors simply have to turn their attention back to a good woman.

I own Dell for one simply reason. A very prominent money manager in Houston named Bill Wood has a wing at T Rowe Price and a cadre of younguns managing funds in the high 7 figures. This is the wing that Dell built.

This guy is an old school Dell disciple/prophet and at his summer seminar stated with perfect clarity a few of the near certainties of investing. This meeting was held pretty soon after the first rate cut, when all the news was still bad and before the October 8th tech meltdown. He said economists are wizards at predicting USA recessions. In fact since 1950 they have predicted something on the magnitude of 20 when we have suffered through 6 or so actual recessions. My numbers/dates might not be perfect here but you get the gist of it. Anyway after running through the historical M1 money supply charts and such he proclaimed the summer meltdown was nothing more than a head fake and suggested that point in time to be one of the greatest opportunities to get into the market. You don't go contrarian against M1 money infusions and rate cuts. Based on what we have seen, Mr. Wood nailed it.

He was especially effusive about Dell's *EARNINGS* growth prospects and hinted that this stock was still dirt cheap by any measure trading at 60 times. And PC penetration of the USA much less the world aint tipped the iceberg. I would like to hear more on the demographics regarding this. Being a geek I guess I just assume everyone has a computer.

"All bets off looking beyond 16 months. We have to be due for a recession to coincide with the introduction of whatever mandate the next president will declare in his slim electoral victory. I don't think we have found a technology so grand that it can cure the business cycle."

What luck to pull the trigger on Dell when it hit 41 in intraday that wonderful day when the House voted to impeach, but along partisan lines. Remember the Dow tanking 200 some odd points and ending the day off 7! Upticking on every Democrat vote that didn't abandon Clinton. Simply incredible. I guess I trusted Mr. Woods words that investors invest when the sky is falling, not when the news is all good. If the whisper numbers don't get out of hand, Dell has to power forward from here.

All bets off looking beyond 16 months. We have to be due for a recession to coincide with the introduction of whatever mandate the next president will declare in his slim electoral victory. I don't [think] we have found a technology so grand that it can cure the business cycle.

Next stop, Cisco or doubling down on Dell when the next panic wave hits the street after earnings are announced in January.


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