mcliu

Despite the seemingly large cash balance (which is really not so large after excluding debt), how do you guys get comfortable with the management's capital allocation decisions? It seems like the evidence points to: - Poor timing of buy backs (more at the peak, less at the trough) - Issuing dividends instead of purchasing shares - Expensive acquisitions and lack of transparency on acquisition performance (especially given the recent Autonomy debacle at HP)

A lot of conglomerates trade at a discount to NAV. I think the discount/premium is really a function of the value of the management team. http://www.investopedia.com/terms/c/conglomeratediscount.asp#axzz2DzzFi45B

I think there's been a couple of threads on this, but no real conclusive answer. I was just wondering if there's a website that compiles a list of special situation investments that we can look into. Reorgs, spin-offs, split-offs, etc.. If not, is there any analyst research that covers this area? Thanks,

How did you guys get comfortable with Dell's capital allocation skills? There doesn't seem to be much data on the IRRs for the significant past acquisitions. How do you know they will achieve reasonable returns with their large acquisitions? I'm looking at Q2 and it seems like PC business revenue is falling much faster than the Enterprise business. (Is there a way to find operating income by product instead of business unit? That will add more colour to whether Enterprise can actually drive value going forward.)

Comments? His buddy Chanos is/was short DELL, so maybe he decided to get out based on what he believes market sentiment will be for the short term/medium term. It sounds more like he exited based on short/medium-term issues with the non-PC business rather than sentiment. Do you have any insights into the performance of the non-PC business last quarter vs. the quarters prior to that? Thanks. I just don't buy that he exited based on lower than expected non-PC growth versus PC revenue decline. Would he really be making decision on fluctuations in revenue growth in the near term/medium term, given the situation for large enterprise and the public business in light of Europe? That's far too close to what the analysts do each quarter. Now, it does sort of sound like he doesn't think that cash will be used wisely at DELL. That is a different rationale for exiting, but he doesn't commit to that viewpoint. I have no insight in addition to what DELL publicly discloses in its quarterly report and CC. Maybe he's uncomfortable with the downside risks now that a lot of the balance sheet that protects the downside's converted into streams of income that may or may not exist in a few years?

Sorry for the troll, but the Ethics guide says you should refer to yourself as CFA Charterholders. ;D

Would this be available for free anywhere in Canada like at the libraries? What do you guys think of Value Line vs. Morningstar vs. Databases like Capital IQ/Bloomberg?

Dell says that they've done about 10 billion dollars worth of acquisitions since 08, have already collected about 9 billion in revenues and have increased revenues by 90% from time of purchase. Thanks oldye, do you know where I can find more colour on that?

Do you guys know if there's a way to estimate how Dell's acquisitions have performed since their acquisition? Or if there's a way to break-out acquisition revenues/operating income from existing businesses? Also, does Dell breakout gross margins by product line? I find what Dell said about growing EqualLogic's customer base from 5,000 to 30,000 to be quite interesting. If they're able to ramp up distribution/sales at that rate, these pricey acquisitions don't seem that expensive.

Should you be looking at EBITDA when you're an equity investor? Isn't net income what ultimately flows to the stockholder?

DCFs are inherently sound if you can correctly estimate the cash flow and you have an appropriate discount rate. I think the problem is using the CAPM as a basis for determining the discount rate.

Brings to mind whether investors like us are actually able to make better decisions vs. the seller.

@ValueInv, yes you've definitely nailed some of the points I was trying to make with my inversion of Uccmal's bear case to see whether the business' growth is actually sustainable. On the other hand, when we're inverting, I guess we also need to invert the bull case. What would need to happen for Apple's growth to be unsustainable? How would we think about the business: 1) If Bill Gates goes back to MSFT and it's the 90s all over again? (Not possible.) 2) If the current team at Apple fails to out innovate its current competitors? (Hard to see, there's a small leap of faith component here, since we don't know what they're really working on and what competitors are working on. We can only see the incremental innovations of the past from the current release cycle.) 3) If a competitor, like MSFT or Google, creates an equally innovative OS and the "commoditization" of hardware drives down the price of handsets? 4) If the switching costs of competitive products are equally high? (I have a Windows PC + X Box, maybe I'll get a Windows Phone once a decent one comes out. Or Google Search works better on an Android.) For me, this goes into the "too hard" basket, although I personally think the bull argument is a lot stronger than the bear argument. I buy the whole "Apple has a superior ecosystem argument" which is especially true in a growing global market, this could potentially be just the tip of the iceberg. (Then again, I take myself with a grain of salt, 4 years ago, I probably also thought RIM's powerful Enterprise Server + BB Client business was a superior ecosystem.) That's the hardest to say. I mean, there will definitely be tremendous amount of competitors targeting this space, but to succeed in capturing share from Apple it'll require a combination of superior vision and execution. If Apple has assembled the right culture and team, it would potentially be possible for them to defend against new entrants. I mean, maybe Jobs has figured out the secret Coca-Cola recipe for tech/product R&D success and maybe it tastes like an Apple?

Hi. First post here. Just like to say that this forum is an extremely engaging place for investors and the quality of work is remarkable! Quite an interesting and lively debate here, so I would just like to add my two cents and see what you guys think. First, it was interesting to see the emotions running through this thread. As value investors, isn't it best if we stayed rational and considered only the facts or opinions backed by facts? Personally, I do think that there is the possibility of Apple may be able to create a sustainable moat. Although, it's not obviously inevitable that the business will be a winner in this industry. It's also not obviously inevitable that Apple will fall like the giants of the past. I mean IBM has continuously evolved its business. I think Uccmal's idea of inverting is sound. However, rather than thinking of it as a value investment, maybe we can invert from the perspective of what would Apple need to do for it to have a sustainable moat that lasts? Would we think about Apple different if: 1) Jobs was still alive? (Not a possibility) 2) Someone just as creative as Jobs was a live? Is Jobs really one of a kind visionary? 3) Is it possible that Apple has laid the foundation of a R&D group that will continue to out innovate the rest of the world? 4) What if Apple products become as pervasive as Windows or Office globally? 5) What if switching costs of Apple products become very high?