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Dellicious
By Randall Abramson

The gap between value and price for Dell has widened to an unusual extent.

What attracted us to Dell (DELL - $15.44) recently was the lift in its Fair Market Value to the mid- $20s, while its share price sank to a floor of around $14 in our proprietary TRAC™ work (Trapeze Ratio of Adjusted Capital.)  After stagnating for a few years, Dell is adding value again.

The company is somewhat misunderstood, as the struggling consumer PC business -- for which Dell is widely known -- now represents less than 5% of profits. Like IBM, H-P and others, Dell has morphed its business to address the enterprise market and IT services. Michael Dell has taken over the reins again and insiders have been buying.

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MervynTeo
Comment
Thu March 10, 2011, 19:50:46
19% fcf yields seems abit too high.
I think the main concerns are
- no dividends
- slash costs but no top line growth
- overall possible negative outlook from free sourceware, mobile and cloud computing.
orieyal
Comment
Thu March 10, 2011, 17:49:57
Hi Randall. Thank you for this interesting article. What level of free-cash flow are you projecting to get a 19% FCF yield? Also how do you calculate $9B of net cash?