Compaq Message Board - Msg: 8114650

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Technology Stocks : Compaq

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To: Elwood P. Dowd who wrote (51153)	3/2/1999 5:14:00 PM
From: rupert1	Read Replies (1) of 97611

El: "I said 28 tomorrow." Good - it will save me buying at $30. Seriously, I know this is a stressful time for some folk on the thread, and I would prefer to see CPQ going up. I reckon I have a nice average price to make a good profit in the next 45 days. I would like everybody to get back to where we were last week and start building from that. There are some dangers. The first is the effect on all stocks if the major DOW and NASDAQ main board indices decide to have their correction. But even if we had not had the "phantom warning" about sales, this correction would have brought CPQ down. There is some comfort in the fact that the downside is now limited. The second would be if DELL goes through a wash-out correction as many believe it should (and I was one of them) to the $60 range. Obviously, this will create more jitters for CPQ. Again, downside is limited. A 40% correction for CPQ from its high would be $31.4. And 40% correction for DELL would be $66. That would make DELL a $33 stock after the split. A 45% correction for CPQ would be $28.8 and for DELL it would be $60 1/2. If CPQ and DELL corrected by those amounts, which stock would the market buy for the rebound? The stock split would be attractive and people would assume that DELL would resume its role as the faster of the two PC cousins. I would guess that DELL would be the stock of choice in the immediate upward movement. But second thoughts might favour CPQ on a fundamental valuation basis. Another factor which might come into play is announcements. It is hard to see what genuinally radical announcements DELL can make in the next few months. We more or less know what it intends to do. But CPQ has a number of possibilites. The first is an AV related acquisition or partnership announcement (to be followed by the spin-off announcement). A second could be an announcement of a very srong increase in revenues and margins from services a la IBM last year, which will also have the effect of enhancing its image as not merely a PC company (and I have noticed that this observaton has been made by quite a few analysts and commentators). A third might be new products. What would make the market go up? The first is a reduction in interest rates on the long bond. There was a slight easing today. Bollinger said he thinks they have gone too far outside the band on the upside. A secodnr reason could be purely technical, i.e. a temporary dead-cat bounce from the oversold condition.

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