Howie: Companies that make major acquisitions of the scale of the Tandem-DEC acquisition usually go through prolonged periods of organic adjustment which takes from 6-8 quarters. During this time, their stock price is first depressed and then volatile. When they fully emerge from this process their rate of growth can be powerfully leveraged by the enlarged asset base and the economies of scale. In addition, leading companies such as COMPAQ, which is the NO. 1 in several product lines, should be selling at a premium to the sector not a discount. The upward adjustment is inevitable and over a period of 12-18 months going forward will offer greater prospects of growth than any comparable company in the sector.
In addition to this argument, consider the impetus to both the real value of the company and to the market sentiment, arising from the spin off of Alta Vista.
However, depressing, boring, frustrating short-term set-backs are, the share price will be between $65-75 sometime in the next nine months and that rate of appreciation is not to be sneezed at. (Unless you are a Jimbo and want 373% every week).
I am looking for $90 by the Spring of 2000, but would hope it would get there by January/February 2000.
I wrote this on my AR-TISH-U Nostril-sized COMPAQ. |
