CPU in play tomorrow. Article coming in Business week.
Business Week: June 21, 1999
BusinessWeek Investor -- Inside Wall Street
CompUSA: Set for Sweeping Change
CompUSA, whose stock slumped from 21 3/4 a share last July to 6 in mid-March--and now trades at 8--is likely to become a very different company before the end of the year. From the way some professional investors are sizing up CompUSA (CPU), which is the largest retailer of personal computers in the U.S., the company will either emerge as a ''technology superstore'' or end up being acquired by one of the big office-supply retailers, probably Staples,
at least according to one New York money manager. He figures that CompUSA stock is worth at least 16 a share in a buyout. This pro thinks Staples will make a move on CompUSA.
As the selling price of PCs continues to decline, the revenue shortfall cuts deep into the profits of computer retailers such as CompUSA. And with low-priced--and low-margin--PCs becoming an ever-larger slice of the sales mix, overall industry profits are hurting, too. To address the crisis, CompUSA has recently hired two investment advisers to come up with a company strategy to enhance shareholder value.
''It could mean selling the company, or cutting its exposure to PCs and instead focusing CompUSA's brand name on other digital products such as cameras, disks, and toys,'' says Arvind Bhatia, an analyst at Southwest Securities. ''Staples would be a viable buyer,'' he adds. But he insists that he doesn't know that any deal is brewing. Staples spokeswoman Shannon Lapierre and CompUSA's Suzanne Schelton declined to comment.
BY GENE G. MARCIAL
Copyright 1999 The McGraw-Hill Companies, Inc. All rights reserved. Any use is subject to (1) terms and conditions of this service and (2) rules stated under ''Read This First'' in the ''About Business Week'' area.
6/10/99 8:04 PM
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