Compaq Message Board - Msg: 8566119

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Technology Stocks : Compaq

Public Reply Prvt Reply Mark as Last Read File

Previous 10 Next 10 Previous Next

To: rupert1 who wrote (54980)	3/27/1999 10:15:00 PM
From: jim kelley	Read Replies (2) of 97611

Victor, I am not going to argue with you. CPQ, IMO, stuffed its channels in Q4 and it is clear that it is working off inventory as it goes into Q1. I have already stated my case for this based on their 10-K and the 10-Q and 10-K figures for the channel. The inventory pipeline is still around 70 days through CPQ to the customer. CPQ has to be valued based on its annual performance because it can easily manipulate any quarter's results. The 42 cents reported has already been discussed. It is easy for CPQ to ship product to the channel and book it as a sale. Thus CPQ financial statements can be as flexible as silly putty in any given quarter. My estimate of 20 cents a share was based on CPQ having a tax rate of 26% which is exactly the tax rate they had in the preceding quarter. Instead they used a tax rate of about 18%, Much of the 42 cents was due to unusual tax benefits and credits not to operational efficiencies. A channel stuff of 3- 4 weeks would yield the desired earnings number. Whoopee! Kelley is wrong! CPQ began a massive PR campaign in October which resulted in the stock price running up to $ 50 per share. During that time it was reported that insiders were dumping most of their stock. Thus the thread was warned. This is why CPQ is being sued! I did not advise buying DELL at 110 as it became clear that the storage business revenue was not additive to the DELL revenues. If it had been DELL stock could have run to 130. But it was not. I liquidated my short term position in DELL at 108 + and hedged my long term position as I felt the downside risk was greater than the upside potential in the near term. I made a lot of money on DELL. My position on DELL has been hold- not short term bullish.However, it has been long term bullish. My position is subject to change at anytime based upon evaluation of new information. There is new information on DELL that is positive for DELL. Whether it is sufficient to become short term bullish on DELL is too early to tell. So you got my position wrong! As for IDC, I was referring to a specific weekly report which I thought was very poorly written. IDC in general has been accurate as to the overall market within about 5%. However, it tends to come out too late to be helpful in quarterly plays on the market. So you got my view of IDC wrong too. There is too much emotionalism on the thread IMO and you are contributing to it. I am learning a lot about this business watching CPQ do battle with its competition. This is the fun for me. I guess it is not fun for you. Incidently, I am glad I did not invest in CPQ. It would have been very costly. IMO there is more trouble on the horizon for CPQ. Trouble with the channel is the current hot issue. I do not expect to be right all the time. It is clear that no one on this thread can claim that. But honest discusion can help one be more correct. I will settle for that. Good luck ..... JK

Report TOU Violation

Share This Post

Public Reply Prvt Reply Mark as Last Read File

Previous 10 Next 10 Previous Next