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Technology Stocks : Compaq
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To: Ibexx who wrote (15811)1/31/1998 9:54:00 PM
From: Loki  Read Replies (1) of 97611
 
Ibexx...Good points. Relative quick time frame is important to establish and grow overseas business, to take advantage of opportunities.

DEC does have brand name internationally beyond CPQ. (Foot in door)
European businesses are extremely weak in using available computer
technology. Upgrades are needed (EEU) - Olivetti? No! Italian reliable support? Although O. has been profitable last couple years.
CPQ - DEC can have advantage. Americans are the best marketers and recognized for computer technology. Very welcome in Europe at this
very ripe time. (BTO - Europe?)

Will USD exchange rate be disadvantage? USD = 1.82 DM

Asia is somewhat in slow down from buying US computer products.
In general they are more advanced in computer technology than Europe. (I was in our Chengdu office in 1995 when they where networking their computers to the Kunming and HK offices). If US politicians use IMF bailouts, and support, to gain access to the very restrictive markets in Japan and South Korea, US businesses will have a wonderful market in which to sell two years from now. (Forget Indonesia - IMF money down the drain).
If American politicians do not continue to shoot American business in the foot, internationally, E. Pfeiffer has certainly positioned CPQ into a global corporation that can take advantage of the globally technology starved markets.

The approach last week appears to be (excuse me for using a military reference) a well orchestrated "Blitz" into the market and against
competitors. One can hardly believe that the below were coincidences,
within the same week.

1. DEC merger (takeover) (It could now be viewed as a panic move if
DELL were to try the same immediately.
2. Radio Shack (exclusive CPQ)
3. Canon distribution (It is imerative to have a Japanese partner to
penetrate the sub distribution chains, common in Japan)

Although CPQ stock may have reached its "law of deminishing returns"
I believe it to be more solid now. Obviously a sign of a management
team that has proactively adapted to the changing market as opposed to a management that blames a market after dissappointing news.

If we apply a P/E ratio of 20 - 25 by end of 1998 we should have
stock price $32 - $40. I will take $40/share versus volatilty in 1998. Any thoughts.
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