Compaq Message Board - Msg: 3259837

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Technology Stocks : Compaq

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To: Rob Rob who wrote (14913)	1/26/1998 10:36:00 AM
From: John Koligman	Read Replies (3) of 97611

If CPQ blows half their cash hoard on the acquisition, that means they are left with around 3.4 billion, add that to DEC's hoard and they still have around 5.6 billion, which is not much less than they started with. In the short term though, I can just picture WS analysts putting a negative spin on this. They will say: 1) Deal will be dilutive 2) Management takes eye off the ball, spend time merging the entities 3) Culture clash 4) Overpaid 5) Earnings slowdown 6) Less visibility going forward 7) Blah Blah Blah!!! I don't think EP would have made this kind of deal without careful consideration of the impact on CPQ's future, I think he sees the criticality of obtaining expertise (service/support) in the enterprise space. As servers make continued inroads into the higher end, and with the coming of Merced, I bet that several years from now the analysts will be touting the 'vision' of this merger.... John

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