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Technology Stocks : Compaq
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To: Kaiser1 who wrote (28545)7/6/1998 5:37:00 PM
From: jim kelley  Read Replies (1) of 97611
 
Kaiser,

IMO, CPQ stock price is likely to be trading in a range for 6 months until CPQ can demonstrate that it can recover profitability. If it fails to do this in 6 month there is a good chance it could be trading at 14 instead of 25-30.

The short interest may represent short term and long term bets against the company. The short term bets have to do with the earnings to be reported in the next two weeks. These earning are likely to be less than 0. If they are very bad then the stock could take another hit. The longer term short positions may consist of people betting that CPQ can not make the necessary adjustments in its operating model to compete effectively.

On thing is reasonably certain and that is that CPQ will not be 28-29 per share a year from now. There is a way to make money on this type of hedge as well.

Good luck....
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