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Technology Stocks : Compaq -- Ignore unavailable to you. Want to Upgrade?

To: marquis103 who wrote (64575)	7/2/1999 10:50:00 PM
From: Nouveau_Riche	Read Replies (6) \| Respond to of 97611

Hello Thread, I've been lurking for awhile and finally decided to become a member of SI. I am long this pig with a capital 'L'. I've been averaging in below 26. I could have done better by being more patient. But, timing never being my strong point, I decided not to bother. Oh well, I guess that attitude guarantees it never will be. The pessimism on this thread far outweighs the optimism. I've given in to being frustrated as well, but I'm ashamed to admit it given the short amount of time I've been exposed to this stock. El, et al, you have my sympathy. However, let me throw in my two cents and give you my musing on this stock. (I agree with the comment made earlier that investing in this pig at this point is speculative.) At this point in time I believe this stock is undervalued (hardly an original thought) given the company's assets and market share, as well as its branding and technological and engineering assets. However, the enemy here is erosion of margin and market share as competitors attack this wounded animal while it is recovering. There is a race here. Can this company execute well enough in the short term to prevent significant margin/revenue erosion to avoid analysts from reassessing the company's value and making the stock look pricey at these levels? I believe that this is what is holding the stock back, and until enough has been done by the company to buoy investor's fears of the worse, the stock is stuck here. The longer the company remains headless the more investors will fear the impending assault by competitors and this pig will trade down as competitive pressures begin to show on the wires. With that said, however, the good news is that today the stock remains a value play (another unoriginal thought), and investors like value in growth segments. It's not often that you can find a value play in the technology sector, let alone in a techno blue chip. Investors also like to pay in advance for future earnings (or dump in advance of future failure). So I disagree with comments that this stock will linger for years. Unless, by linger, you mean trading in a range. Stocks rarely stay flat for long periods of time. They tend to trade in ranges. The current range for this stock is $20 - $50 and it has based here for 2 years. A break down below $20 is BAD news. And a test of $50 in the next 12 months is a pretty good bet. Also, a break through $50 (on strong volume) within 12 months, or 3 years into this base, will signal a major break out that will handsomely reward all longs. I believe investors will cause this stock to surge if a good fit is found for CEO as they will not want to be left behind given this stock's relative value and future prospects for a turn-around. Remember, investors pay in advance for the perceived future value. So, this event has to precede any perceived significant reduction in the company's revenue stream. Here are some things that look positive: A couple months ago Compaq announced that it will sell computers via the Web in Germany. At the time I believed that to be a testing ground for their online sales strategy. It has moved ahead of my expectations with the recent announcement that online sales will take place for all of Europe. Laslo's comments are good for at least some additional support if not a modest pop. He is well regarded. The 50-day moving average seems to be resistance. A break above this will hopefully move this pig to the upper twenties with the 50-day MA providing support on fluctuations. Ultimately though, the fundamentals must improve before the lemmings come to the party and drive the technicals. Otherwise, the technicals will erode as time ticks away and the fundamentals worsen. Much more could be said about this pig, but I'll let it alone for now. Comments and critiques are welcome. I wish you all the best and I'm in with you longs. Cheers!

To: marquis103 who wrote (64575)	7/3/1999 9:02:00 AM
From: JDN	Respond to of 97611

Dear Russ: THAT'S the most positive thing I have seen about CPQ in some time. Impresses me. Hope that he is correct. JDN

To: marquis103 who wrote (64575)	7/6/1999 11:33:00 PM
From: Harry Landsiedel	Read Replies (1) \| Respond to of 97611

Russ LaCava. Re: "Laslo Biryni just selected CPQ as one of his picks for the second half of 99'." I too saw Biryni's recommendation. The key verbiage was mixed. Biryni said, "I see signs that the selling has dried up." I was fortunate to tape the broadcast so I could go back and be sure. Naturally, I would have been happier for a more positive message i.e "the stock is under accumulation." But there it is. My personal opinion is that Rosen's actions in terms of reorganization and selling Alta Vista to CMGI has halted the short-term erosion of the share price among institutions. He promised that the troika would not be passive, and he has delivered on this message and bought the company some time with analysts IMHO. However, he does not have much time before investors demand results. Serious share erosion is the key risk here. Execution by the field will be key and a lot will be riding on 4Q. (But we've all been there before.) A new CEO is important but demonstrating that their business model is viable is more important IMHO to establish a base in the mid-20's. HL