The last downgrade and continued bashing of this company, coupled with the latest round of reasons why this computer retailer can't *possibly* survive, strengthens my conviction that this is perhaps the most superb buying opportunity to come along in years.
While everyone was frightened away by Mr. Halpin's cautionary tone about next quarter, I was more interested in the comments about how quickly the old Computer City's were converted into the CompUSA model, and how surprisingly fast the losses were stemmed - resulting in a far lower than expected writeoff, and higher than expected earnings.
This tells me that people who wouldn't shop at a Computer City when Tandy was running that dog operation, flooded into the exact same location when it was remodeled and run as a CompUSA. Furthermore, reports from the brand new superstores (such as San Rafel, CA) indicate that sales are ahead of plan.
Note that despite Halpin's very conservative (if not downright gloomy) outlook, he has bought over 200,000 shares in the past two months. I should point out that CPU executives have a history of conservative or negative guidance when making forward-looking statements. I should also point out that CPU executives have a history of large stock purchases prior to cyclical upturns in the business and subsequent stock price advances.
CompUSA now dominates the computer/sofware/accesories retail space. My guess is that the consumer end is going to boom in 1999 (sales, training, online, mail-order and tech support), I also think that corporate sales will be much healthier than expected since Intel recently announced another strong surge in demand and Microsoft announced plans to ship Office 2000 in Q2 1999.
I continue to strongly recommend buying the stock. |
