<<Personally, I am waiting for the announcements of large scale layoffs at Digital or selling off of parts of Digital, before I sell some (or all) of my CPQ and buy Dell. I have no inside knowledge of this, its just what I expect to happen based on the fact they they obviously dont need (or want) all of it, plus there must be a large overlap in central functions.
Joe C>>
Guess what Joe? I agree. Your thinking is just what most of the analysts (who are very little different from either of us) on the Street are thinking. Why take the short-term risk now by investing in CPQ considering CPQ's recent volatility. There is no momentum to convince most to pull the trigger on purchasing the stock. It's MUCH easier and SAFER for them to pile on the Dell bandwagon since momentum is a proven tactic to making money. Of course, they all are hoping they will be able to get a chair (ie out) when the music stops. (And most will, leaving the suckers (ie little guy) stuck as they bail.)
(BTW: Most run-ups like Dell is experiencing result in 50% retrenchments, meaning that Dell holders are risking a 20% drop at current levels.)
Analysts get rewarded for short term performance which leads to more switching position as they try to time and move the stock (some will succeed due the clout their firms have over the short trend but the longer term success is dependent on company fundamentals not brokerage ratings).
I'm an investor who puts assets into the market and watchs them grow over time. Since I have no intention of using these assets anytime soon, I can relax and worry about the long term. The only long term threat I see to CPQ is that its retail model may prove inferior to the direct sale model for the consumer market. If CPQ were to lose significant consumer PC market share to direct sellers, I would probably reconsider my investment. Until then, I will enjoy the positioning CPQ has achieved with the DEC acquisition.
Unrecognized by most is the value of DEC's assets and people. Everyone recognizes that DEC's management has been inept for going on 15 years. What they don't seem to grasp is what a competent and driven team like CPQ's could do with DEC's assets. In many ways DEC reminds me of XEROX back in the 70's which failed to capitalize on its own research (can anyone say the first PC, the first mouse, and the first graphical user interface (ala Apple Mac and Windows predecessor) ) and assets and for 10 years lost ground to Japanese competitors in its core business as well as being a non-factor in the stupendous rise of the PC industry.
Sure, the integration is a bump that must be travelled over but CPQ will get over it (much better than IBM did with NCR) and in the long run reward its shareholders.
OB |
