Victor .... About Balance Sheet
>>>You must be reading the wrong balance sheet.<<<
For sure, one of us is not reading it correctly. I have to admit that I'm not an accountant and I don't understand the financials that well.
However, common sense tells me that their financial situation was deteriorating because of the following:
1. S&P lowered their rating in late July or early August 99.
2. They borrowed $1.312B during Q3-99 according to their financial statement for the quarter.
www2.compaq.com
If you find these two items as a sign of financial strength, please explain.
The first sign of financial strength was telegraphed to WS by Ben Rosen when he increased the dividend by 25% on 11/16/99.
www1.compaq.com!ob~23350_1_1,00.html
The second sign was during Q4-99 CC when they said that they reduced their short term debt by $400M (or $600M, sorry; don't remember).
Regardless of what you think about AV, it is crystal clear to me that they did the right thing. The argument that having a portal makes them an internet company is totally false. The fact remains that CSCO, SUNW, EMC, and to some extent IBM, are perceived as internet companies while they are basically hardware companies (and BTW none of them has a portal) similar to CPQ. The main reason for such perception is that their financial performance and operating margins are much more superior than that of CPQ at the present time. Should CPQ be able to get their financial performance to the industry norm (10% to 12% OpM, and 10% to 15% revenue growth), the perception will change. It doesn't have anything to do with a portal, as your argument goes.
In fact, CPQ has more internet properties than any of these companies. CPQ has:
1. ~$8B in internet investments
2. Several properties in the development stage:
- Speechbot
- Millicent
- B2E portal
In summary, CPQ is well positioned to strive in the internet age without AV.
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