Howard,
In the 50's Compaq's PE would be below 20, and below the S&P 500 market multiple. Unless you think Compaq's business is going to stop in it's tracks, I don't believe it will stay down at that level, assuming it gets there at all. Remember, everyone is talking about the 1k PC, but that's a very recent phenomenon (couple of months at most), and has not added much to Compaq's bottom line. They make their money on servers, and correct me if I'm wrong, but the server market is quite strong. Also, remember that management has stated they see Compaq at 50B in revenues by 2000, that's a pretty good growth rate...
John
PS - I don't see MU as comparable to Compaq at ALL. Compaq is making rapid inroads at the enterprise level, with Tandem being an asset in that area. They are much more than a commodity producer of cheap PC's. Remember that they also took the number one spot in the laptop market away from Toshiba, those boxes have higher margins than desktops. Remember, that in the not too distant future NT 5 and Merced will be coming out, that will introduce a new level of power into the marketplace, and will prompt a new round of upgrades by corporate America. You should be buying these types of companies when they pull back, remember the networkers this spring? Turns out they were bargains at that point. |
