Joel,
How did you pick 38? Assuming earnings are on track (and Pfeiffer said they were, he will be on CNBC Monday), that would mean a PE of around 12. Even IBM is selling at a higher PE than that, and they are NOT growing. CPQ also has as much cash as IBM, over 6B last I heard, which is getting fairly close to 10 bucks/share. Are you serious in stating that you think Compaq should sell well below the market multiple?? Barring a market collapse, I would be interested in hearing how you arrived at that number. Remember that CPQ is making big money in the server market. If you are betting on internet/intranet growth, that requires lots more servers. What about the replacement market? What about when Merced comes out? How does a PE of 12 square with management's statement that they should hit 50 B in sales by 2000?
Thanks,
John
PS - Are you talking about 38 pre or post split?? <ggg>
By the way, I find it quite impressive that a commodity box maker has been able to buy a major computer company this year (Tandem) and have 6 billion in cash on the balance sheet. How does one accumulate 6 billion with all those price cuts over the years??? |
