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Technology Stocks : Dell Technologies Inc.

DELL 127.64

+4.2%

2:27 PM EST

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To: rudedog who wrote (83951)	12/6/1998 5:35:00 PM
From: jim kelley	Read Replies (1) of 176387

Dog, I guess you are about back to where you were last year with CPQ as far as stock price goes. My point with CPQ is that its management has been less than forthcominig with the numbers on its performance in the past year and a half and it looks like that policy of financial obfuscation continues today. This is reflected in the stock promotion activity that has been going on for the past month. All of a sudden, CPQ has a positive PE despite their huge losses last year. Tandem and DEC both had flat growth and earnings and add incrementally to CPQ business but the notion is that the combined company will somehow grow faster than market as a whole despite the shrinkage in CPQ's core business. It is clear that CPQ has not completed its absorption of DEC because it has not been able to reduce its workforce in Europe as it originally intended to do. Also, it is not clear what the consequences of CPQ's competition with their dealers will be. Kumar apparently does not expect CPQ to make its numbers this quarter and there have been rumors of channel stuffing. The truth is out there! You seem ready to forgive CPQ's deceit with respect to their actual sales last year and their misleading the investors with their public statements. I know you have a large investment in CPQ and I can understand how any move that looks positive must be an upper for you. We are essentially dealing with the same management team that cooked the books a year ago and it looks like they are still in the kitchen. I will be impressed when their quarterly reports become as easy to read as DELL's. Even if CPQ was able to achieve $2.00 in EPS next year, the stock would not be worth more than about 40 to 50 dollars per share by most measures of valuation. Remember the growth rates of DEC and Tandem were flat. CPQ original core business actually shrunk last quarter. If CPQ core business were to grow at 17% going forward that would justify a price of $34 per share next year not this year. Thus, CPQ is looking more and more like a good short candidate. Regards, Jim Kelley

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