Re: "It helps ROIC"
I am a DEC shareholder and thus far I have held on to my shares, rather than selling out to the arbitrageurs. The main reason that I have held is because the I believed that there was a possibility that CPQ management could exploit DEC's assets much better than DEC itself and also because CPQ's valuation seemed reasonable while its chart promised more upside than downside. After reading the Wall Street Journal today, I am now concerned that CPQ is losing momentum in its PC business and that the stock price will likewise lose momentum.
For one thing, I cannot see how selling receivables can possibly improve actual reported profits, since you have to sell the receivables at a discount. And what can Compaq possibly invest the proceeds in, except short term investments with relatively low returns (cash/equivalents are already huge)? It seems that CPQ only sold the receivables to reduce the denominator in the income/capital equation and to deliver on a promise to Wall Street regarding an accounting ratio that does not necessarily reflect true rate of return.
Havn't done so yet, but my inclination is to sell my 3,000 DEC shares and look elsewhere for future returns. (There are no income tax consequences, since the shares are in an IRA.) Just trying to make up my mind whether to wait for a slight bounce or not.
I'm ready for comments, but I am rather bored with those on this board who feel their favorite company can do no wrong and that Wall Street analysts must be stupid. I'm looking for constructive comments.
Charlie. |
