El,
Personally & JMHO, I believe most of the criticism of EP & EM is largely unwarranted. I believe they have always expected to meet Q1 estimates, and even though the negative speculation came out, they anticipate(ed) to make up any QTD shorfall in March. Now, that said, there still remains some degree of speculation as to where March will actually come in. Unfortunately, in this environment, without having the Qtr already in the bag, they cannot make any announcements that they still feel they will make the Qtr. and then have some remote possibility occur in the next 3 weeks due to revenues being deferred or some other unforeseen circumstance that they miss. Their credibility would really be shattered then.
Thus, the best course of action for them at this time is to make their "unofficial" comments only when asked (ie: through IR), ride along for the time being with the lowered expectations and if (or likely, when) they actually do close the Qtr higher than those expectations, not to mention even higher than the original expectations, their stock will respond favorably and they can come out with positive forward statements. If, one of the aforementioned glitches prevail, and for some remote reason they miss the original nos., they still have the lowered expectations to fall back on and no further damage should occur. Personally, I believe my $.36 guess is very conservative and I would not be surprised to see $.38 to $.40.
Why?? I believe the DEC contribution will be far greater than anyone (with the possible exception of victor) has taken into consideration. This includes service and high-end enterprise apparatus, etc. Also, I believe PC sales are much better than the "hype" has given credit for. (Remember, not only is INC not warning--and now that I have said this, watch them come out tomorrow with a warning--but their "official response" regarding Q1 business has been positive (ie: again through IR)) And, last--and certainly least--the annual meeting will be held in April, which I believe will provide a considerable motivation to EP and EM to have as positive an earnings report as is possible.
Thus, assuming earnings are announced the week of April 19th, that leaves about 7 weeks for the stock to move 12 pts., not 3.
I think $40 is possible by the end of March with some positive news starting to leak out of CPQ WHEN they become comfortable with their results and certainly $45 is then likely by the actuall earnings report.
Again, this is just my opinion.
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