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Technology Stocks : Compaq
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To: Aitch who wrote (50002)2/26/1999 2:10:00 PM
From: rupert1  Read Replies (2) of 97611
 
Aitch: Welcome back - did you get to Monaco? Hope you had a good time.

Thanks for the FB report. I noticed that it was the FB analyst who said it was an "industry wide" problem, not ML, as reported by Yahoo. So my earlier comments on that are corrected.

If I did not read these thread, the substance of the report would not worry me. I would expect the stock to return to the $40-42 range within a reasonable time and work its way up. The danger to this scenario is what the revenues for late February and March will show. I suppose we will be on edge until we know - especially as CPQ has apparently "warned " unexpectedly before - after it has given assurances. It may be that this time it is erring on the side of caution, dampening expectations early to leave itself wriggle room.

The Motely article is a rant: it is not based on any knowledge and is no more than a glorified post on a thread. Sounds like the author owns DELL.

I do not agree with many of today's post which depict CPQ as being a bungling uncompetitive company. Those makign such statements should read a little bit of its history over the last 5 years. Those still fascinated with the different rates of growth between DELL and CPQ should recongise that DELL has been rewarded with a p/e of 55 plus for a long time and CPQ has not. In other words they have paid a premium for that growth rate which they have not paid for CPQ's. Today CPQ's shares are selling at least at a discount on a p/e basis of 20%

I am a bit concerned about the management of the AV spin-off but that does not seem to worry the FB or ML analysts, in fact they see it as a positive.

As for earnings - I think they will be assisted again by tax credits, by growth in services, by the firming of margins and ASP.
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