Compaq Message Board - Msg: 8077146

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Technology Stocks : Compaq

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To: Elwood P. Dowd who wrote (50472)	2/28/1999 1:37:00 PM
From: Kenya AA	Read Replies (1) of 97611

E: Although it's good to hear "kind words" about CPQ, in this particular paragraph, it seems to me that this guy is talking apples and oranges ... Here's what happened: Merrill Lynch reported that in their opinion they are going to earn 30 cents next Q instead of 35 cents and that sales will be $9.8 B instead of $10.0 B because prices are dropping for PC's. Helloooo…. Prices have been dropping since 1981 when IBM brought out the PC with dual floppies. OK there he's talking about lower revs due to a drop in ASPs, but in the next sentences, he's talking about a slowdown in PC purchasing. Seriously, there were some significant downgrades on CPQ from other Wall Street firms but this was the "jump-on-the-band-wagon" scenario. We think that this slight slowdown, if it indeed materializes at all, won't affect Compaq's management in their quest to reach $50 billion in sales by 2000. I see lower ASPs and lower demand as two different problems - you can make up for lower ASPs with volume as long as the demand is there. My understanding is that the first six weeks "problems" were demand related. Am I being too picky??? K

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