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Strategies & Market Trends : Roger's 1998 Short Picks
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To: larry who wrote (9673)6/5/1998 1:30:00 AM
From: chester lee  Read Replies (1) of 18691
 
Larry, I'm long CPQ and think the company will recover in a quarter or two. Their biggest problem is their large inventory holdings, which is losing value at a rate of 2% a month. I read that somewhere in Forbes or Fortune. They stuffed their channels with computers and the computers did not sell as they had expected, cascading their problems, because nobody want an older model when prices are continually declining and CPU speeds are rising. CPQ isn't stupid, they will have to drop prices or offer large rebates to move their products until they can get the situation reversed. I remember an ad blitz by a local store (maybe Comp USA or Circuit City) that offered a free color monitor with the purchase of a Compaq desktop. Anyway, I can see shorting CPQ at these prices when there are better shorts.

Chester
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