Michael Capellas responds!!
Sharing an email from Michael
To: Compaq Worldwide Team
As you may have noticed, Compaq’s stock price fell as much as $5 a share on Thursday in reaction to a Wall Street analyst’s report. An analyst from Salomon Smith Barney erroneously reported that we have extended the price protection we offer the channel on certain products, raising doubts about our channel inventories and Q2 revenues. He also downgraded our stock, which closed Thursday down 3 3/16.
This was an issue we had to confront head on, so we released a public statement Thursday afternoon from Jesse Greene, our chief financial officer. It said:
At this time, we are comfortable with channel inventory levels. Compaq’s channel inventory has been low and in some cases near stock-out levels. Q2 has been very back-end loaded due to supply constraints early in the quarter. There have been no changes in standard price protection terms or any adjustments made in the normal course of business.
Several investment analysts were quick to disagree with the Salomon Smith Barney report and to re-iterate their “buy” ratings on Compaq stock. A.G. Edwards said that the Salomon downgrade “was unwarranted and the sell off was overdone.” Donaldson, Lufkin and Jenrette said that its conversations with distributors “confirm Compaq’s statement that commercial channel inventories are in good shape.” And several analysts repeated their positive views about our prospects for the second half of the year.
We have to expect some volatility in our stock. We cannot control the daily gyrations on Wall Street. However, if we do what we said we would do - increase efficiency, improve profitability and accelerate growth - the stock price will eventually take care of itself. Let’s keep the pedal to the metal.
Michael |
