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Technology Stocks : Compaq

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To: Aitch who wrote (50239)	2/27/1999 6:57:00 AM
From: rupert1	Read Replies (1) of 97611

Aitch: Robinson-Humphrey's analysis is interesting. It did its own original research which it published on February 18th. That research showed an incremental build-up of inventory at the VARs. R-H manages to explain this build-up without attributing it to "channel-stuffing" by CPQ. R-H had already stated that it expected the inventory problem to affect 1st quarter sales and so has earned some credbility. R-H takes the view that the problem is not so much slower demand in the first six weeks, but the need to work down inventory from VAR's. So even though it views the problems from the perspective of inventory control by VARs (what Kumar uncharitably calls "channel-stuffing") it's conclusion is less draconian than some of the other analysts. It reduces expectations by only 2 cents for the quarter and retains the original expectations for the year: "Since our analysis of channel inventory supports the concern of slower shipments from Compaq - - perhaps for different reasons - - we will lower our Q1 EPS estimate modestly to $0.32 from $0.35. Our 1999 EPS estimate remains at $1.70 versus a consensus figure of $1.80. Rated2/2-H."

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