Low Volume contributed to deterioration in share price. The sackcloth-and-ashes gloom on this thread yesterday had nothing to do with fundamentals and was as silly as the Church Triumphant atmosphere of a couple of weeks ago.
The fundamentals, including achievement of the lower end of expectations of performance in 2000 suggests that fair value right now is $27-29. Momentum took it over $33 and momentum has taken it back to $24. Momentum exaggerates in both directions. If good news for the sector and the company is forthcoming allowing confidence to re-build, it should approach $33 again just before or after 1Q earnings.
In my view COMPAQ remains a good trading stock between ranges. A buy at $25 offers a 20% rise in two months or less and any price below $25 is a gift.
The following post from Yahoo Club from a poster who studies fundamentals makes a prudent bull case. He excludes investment gains.
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It is clear in my mind... brian_cranston
2/15/00 12:01 am
Excluding investment gains, CPQ will earn at least .16 in Q1. 2000 additional layoffs, previously announced plant closures which take effect in Q1, increasing direct mix, iPaq and Win2000 rollout will all help CPQ get there. CPQ will be back near $30 by Q1 earnings. CPQ will earn at least .22 in Q2. 2000 additional layoffs and an even greater direct mix will help in Q2. CPQ will be near $35 by Q2 earnings. CPQ in Q3 will earn at least .30. The absense of $65 million (.04/share) in Alpha/NT costs, Wildfire revenues starting to ramp up, and the return of CPCG to profitability will all help. CPQ will be near $40. CPQ will earn at least .40 in Q4, bringing earnings for the year to at least $1.08. The achievement of 40% direct sales, combined with massive sales of Wildfire, consumer pcs, and new internet devices will lead to a huge quarter. By Q4 earnings, CPQ will be mid to high 40's, or perhaps even get ahead of itself to an all time high. Then someone will remind that Q1 revenues will be less than Q4 due to seasonality, and CPQ will correct some, as if people didn't know that this has happened for the last several years.
CPQ's recent decline has been on low volume. I think CPQ is believed to be dead money till at least next earnings report (may very well be true).
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