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Technology Stocks : Compaq
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To: rupert1 who wrote (77032)1/28/2000 3:19:00 PM
From: rupert1  Read Replies (2) of 97611
 
Before earnings, Capellas was trying to prepare the market for the concept that COMPAQ would treat its investment holdings as a contributing profit centre.

At earnings we saw that 3 cents was attributable to $50 million after-tax profits from the sale of investments. This caused critical comment.

Dan Niles has noted that COMPAQ intends to monetize its investment holdings on an ongoing basis. I don't know how they will do this, but when the lock-up period with the CMGI and AV shares is over, I suppose they could sell chunks to produce $50-100 million every quarter to make whatever numbers they want to to achieve. It would be a kind of slush fund. I don't think Wall Street will ever feel comfortable with this. Even if it gets used to it, it will still try to evaluate COMPAQ on the basis of its core operations.

It's just a thought, but the difference between Capellas Mark I (15-17%) and Capellas Mark II (12%) gives a clue as to what percentage will be manipulated from the investment holdings to make up the original 15%.
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