Steven -
This is the "buy low" portion of the "buy low sell high" equation. CPQ is the #1 PC vendor and the #2 computer vendor, and is priced way below everyone else in the sector. Unless you believe that the computer business is somehow a bad investment now (despite its having been about the best investment one could make over the last 10 years), then this would be a great time to buy for a long term core holding. There is some question about whether it will drop another few points or not before beginning its inevitable rise back to a reasonable value. That depends on how quickly CPQ can take steps to restore investor confidence in management.
I am as disappointed as anyone in the current position of the company. I had a friend who had a 5k share holding in DELL in the early 90's. In early 1993, DELL encountered a number of business problems. Confidence in the "Boy Wonder" evaporated. Wisdom on the street was that DELL was dead meat. The stock price tumbled by nearly 50%. He felt about as depressed about his investment as many on this thread do now. He sold his DELL near the bottom and bought HWP - after all HWP was a solid well run company with none of the "management problems" of DELL. A year later, HP was lower than when he bought it, and DELL was on the start of its record run.
So I guess the moral is, if you have faith in the fundamentals and market position of the company, a low stock price is an opportunity, not a punishment.
If there is a management shakeup in CPQ and they make moves to restore confidence, I will be a buyer. |
