Compaq Message Board - Msg: 1707750

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Technology Stocks : Compaq

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To: mozek who wrote (3715)	7/5/1997 11:18:00 AM
From: Jim Garrison	of 97611

Mike: I realize that that is how the merger is being presented, but I detect a big lack of numbers - IMHO you have to take the leap of faith that the synergies will offset the costs. From Zacks info: Company Revenue Profit Margin Rank in industry/industry CPQ......18.7B......7.8%.......1/13..comp-micro Tandem....1.9B......5.1%.......6/10..comp-mini From this simple comparison, tandem would represent about 20% of combined revenue and earned about 2.7% less on each revenue dollar. Maybe, as steve suggests, they gotta cut costs. I thought it might be the industry - like in highly competitive, big sales/support/r&d costs and lower profit margins- but Sun Microsystems - the only mini I would consider owning stock in - 3/10 in mini industry - has profit margin of 8.2%. The plus side is that the stock is up since the announcement. I consider this to be a big plus (I got killed in the Applied Magnetics merger announcement/fiasco earlier this year). Time will tell. My opinion only. Good Trading, jim garrison

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