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Technology Stocks : Compaq
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To: sheila rothstein who wrote (17015)2/7/1998 7:36:00 PM
From: Mohan Marette  Read Replies (1) of 97611
 
Sheila & Luc:

1) One apparent reason is the number of stocks outstanding.
CPQ now has over a billions shares outstanding whereas DELL has
only approx.365 million shares outstanding.

2) PE- Look at the PE of each companies,Dell is at some 40 something
and CPQ is approx 25 or something.This means investors are willing
to pay more for DELL than CPQ based on the the rate of growth in
revenue and earnings,both are higher for DELL.

If DELL were to have the same # of shares outstanding and earnings & growth rate were similar to CPQ then at these levels Dell wouuld have traded for approx.$37.00.

Does it make sense? Perhaps someone else would explain it much better than I.
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