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Dell Computer Corporation (DELL) Message Board

  • murfdog_ murfdog_ Feb 23, 1998 10:21 PM Flag

    hey dell longs: I have a question

    I just jumped into Dell in November. I am planning on buying some more stock. I am new to this investment business outside of 401ks and index mutual funds.

    What does Dell typically do around splits? Does it keep rising until the split ? What does it typically do after a split ?

    This is assuming nothing outside hits the market as a whole. I am just trying to understand the whole split issue. I saw what happened to MSFT and CPQ. MSFT kept rising and then had a big rise today after the split.

    To me,it appears that the odds are good that Dell could hit 140-150 sometime in March.

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    • Dell runs up big from split announce to actual split date
      historically. 30% or more. Last split it was almost 100%.
      It's already run up 15% so I'm expecting another 15% before
      March 6th which will put it in the range of $140-$150. After
      splitting it runs up some more, but not as much, as small
      investors are attracted to the lower share price. Call it
      $80 in the weeks following the split.

      I expect the stock to take a breather from there, maybe
      retracing 10%. Earnings released in May will give it small
      shove back up to $80 range then I expect some big news in the
      summer to fuel a rally up to $100 by October. If the market
      and the price is stable then we can probably expect another
      split in October, another rally to $120, a split to $60, and
      then profit taking back down to $50.

      Adjusted for splits that would translate to a 1JAN98 open of
      $85 and a 31DEC98 close of $200. Of course this may not be
      enough to get Michael Dell the top S&P 500 CEO award for a
      third year running so maybe he'll have enough positive
      surprises to nudge it a little higher.

      On the downside I don't expect it'll do any worse than another
      25% up from today's price - call it a split adjusted $160 in
      December.

      Of course any bad news coming out of the company can cause a
      major selloff but it's hard to imagine any news bad enough to
      drive it below $100. The company predicted a good year with
      lots of opportunity and it doesn't have a history of
      disappointing performance. Last bad quarter was in 1993 when
      it was a lot younger company experiencing growing pains as it
      transitioned from a smaller company to a multi-billion dollar
      business. The Direct model had not been refined at that point
      and a big error in 1992 was an aborted effort to get into the
      retail market. The company has been doing fantastically after
      it re-dedicated itself to the Direct model.



 
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