Here's some interesting commentary on CPQ's numbers.
Fez
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Several Wall Street analysts found little to be excited about immediately following the earnings report, noting that the better earnings came not from fundamental growth in Compaq's businesses but from non-operating activities.
''The number looks OK,'' Gerard Klauer analyst Lou Mazzucchelli said.
Referring to the transition over the last year as Compaq has moved to digest Digital, he said, ''I think they are trying to claw their way back.'' Still, he cautioned, ''I am not completely convinced they are out of the woods.''
Piper Jaffray analyst Ashok Kumar said revenues were roughly in line with Wall Street expectations, while the earnings surprise resulted in large part from higher-than-expected profit margins and a significantly lower tax rate.
He said better margins added 2 cents per share to earnings, and the tax rate, which he estimated at 19 percent, down from 26 percent a year ago, generated another 2-3 cents.
''The quality of the earnings surprise is not that great, but basically you take what you can get,'' Kumar said. He said he would have been happier with the results if Compaq had shown growth in operations as measured in top-line revenues.
''If the surprise was top-line driven, it would be a different story,'' he said.
Still, Kumar saw the earnings report as likely to push the stock higher. In early stock market trading Compaq shares rose $2 to $51.25, a new intraday high. |
