Where is CPQ heading to? See the following report.
Well, the shareholder meeting was full of angry people but it did clear up the Alta Vista situation for me. Most of the meeting comprised of Ben Rosen telling the shareholders how Compaq was #1 in so many different areas of computing like PCS, PC servers, web servers, security transactions, multi-user storage, 64 bit systems etc. He said the potential is there(which it is), but execution has been poor(which it has been). He also said that Compaq would continue to let the customer choose how they buy Compaq products. Which means operations will continue to suffer as they do a balancing act between the indirect and direct sales model (the one Dell uses).
One thing that I did not know at all before the meeting is that all of Compaq has over 3000 patents and 450 have come this year. So that is one postive thing to keep in mind. Then he talked about a campaign called non-stop ebusiness where Compaq guarentees continous connections. Compaq can make a guarentee like that, because it has 38% of the web server market with Sun Micro a distant second.
As far as Alta Vista goes, Compaq intends to transform it from primarily a search engine to a major portal company and only then will it take it public as an IPO. Shareholders will NOT get any shares in Alta Vista because Compaq is maintaing control of it so they can use it as an avenue for future growth. At first, I was angered that I would not get any shares in Alta Vista, but then I saw that this will help Compaq in the long term. Sure, this decision is extremely unpopular and will keep Compaq's share price down for some time since the rest of the company's business is poor right now. However, one shareholder suggested an idea that everybody at the meeting overwhelming agreed with by applause. The shareholder suggested that the shareholder's be given the option to purchase Alta Vista shares at the IPO price. Rosen said that they had alot to consider so he could give no definite answers.
Most of the questions by other shareholders had a negative edge to them. There was a question/statement about why the recently outsted CEO is getting $300 million in severance, several questions about why officers were selling shares, a statement about sorry investor relations and technical support, and a question about services as a % of revenues(all he said was that they were increasing and continue to do so). Then one guy asked about Compaq's relationship with Radio Shack and the officer in charge of Consumer products said that that alliance has exceeded expectations and that they would have an exciting announcement soon. He would not ellaborate on the announcement.
In summary, Compaq is making a huge mistake in trying to be all things to all people. Compaq is also waiting for Alta Vista to digest its mergers of Shopping.com and Zip2 before they bring it public so that may take about 6 months. In my opinion, Compaq has gotten to big for their own good. For there to be any upside in the stock, Compaq has to be an Internet Giant along the lines of AOL and Yahoo because PC prices are falling and will continue to fall. The decision to keep Alta Vista may be there wisest move in years if that is how they attain that status.
Hope all CPQ longs are all winners eventually! |
