See You In Dell! 11-1-05

Good Afternoon.

Overseas markets were up strong in Asia yet Europe was mixed. In the US the ISM came in better than expected at 59.1 versus forecasts of 57 yet the prices paid component is still problematic for inflation. Remember growth and inflation are still fundamentally considered "a good thing"(thank you Martha).

Today's action is weak in front of the FOMC meeting. More importantly though is the slide in shares of DELL. While we are not terribly concerned or surprised by DELL's preannouncement nonetheless we did a sanity check on the validity of our Bullish view of the fundamentals of the technology sector. It seems that DELL's complaint about consumer demand flies in the face of other evidence showing robust global PC Growth. In all likelihood the law of large numbers has finally caught up to DELL. The sell-side analyst community (who are notoriously behind the curve) still factors in huge market share gains for DELL in addition to sales from overall demand. Apparently competition from the likes of Hewlett-Packard (HPQ) and other smaller players have crimped DELL's ability to take over the PC world.

We are comforted in our awareness that overall unit volume in DELL combined with its competitors still seems to be robust. Therefore we will be taking the DELL preannouncement as more company specific versus an indication of the health of consumer demand. When analysts extrapolate the DELL news and lower their forecasts for industry demand they will once again be wrong and have to play catch-up throughout 2006. This scenario is another feather in the cap for contrarian long-term Bulls.

We do not deny the fact that consumer confidence has waned in the last two months. Indeed the level of frustration has been building, further setting up an explosive opportunity on Wall St. as well as Main St.

There are many parts to the puzzle that have finally been put in place for the long awaited technology blastoff. The picture on the puzzle is starting to look like the one on the box but we could use a little more gloom in order to fully complete it. As long as nobody accidentally kicks over the table, the setup for completion is sooner rather than later.

Hope you're doing well.

___________________________________________________
The analysis, opinions and/or forecasts expressed on the Kcap Trading Blog (“KTB”) are for informational purposes only and should not be relied upon in making investment decisions. By using this site you agree that Kleiner Capital Management, LLC (“KCAP”) and its principals are not liable for any action you take or any decision you make in reliance on any content. Please be aware that there is no commitment by KCAP to update the KTB. Furthermore, there may be inconsistent timing and follow up (if any) of posts.
None of the information on KTB is considered individualized investment advice and should not be construed as a recommendation or solicitation to purchase any securities. Reliance on information provided on KTB in no way establishes an advisor-client relationship. Investors are encouraged to seek the advice of a qualified investment professional prior to investing funds.
Clients of KCAP, as well as the firm’s principals and other employees, may be invested in securities discussed at KTB. However, any mention of said securities is not intended to influence market conditions for the security to the benefit of KCAP clients and/or principals and employees. KCAP is not affiliated with any advertisers on this site and does not endorse any of their content. For additional information and disclosures, please visit www.kleinercapital.com.
The information on KTB has been furnished from sources we consider to be reliable, but no guarantee is made with respect to accuracy.
___________________________

Click Here To E-mail Comments