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

To: PCSS who wrote (68835)	10/14/1999 10:37:00 AM
From: Elwood P. Dowd	Respond to of 97611

Michael... Hio pm'd this report to me last nite. Don't know if he posted it publicly. Beautiful here today, tee time 11:30am. El October 12, 1999 4:35 PM Compaq Soars Against the Red Tide By Monica Rivituso COMPAQ (CPQ) shares were up 6.3% today. We know, we did a double take too. But it's true. If you take a look at our Map of the Market, you'll see that Compaq was just about the last man standing amid the killing fields. Investors were piling into shares of the beleaguered PC maker today. The question is, why? Yesterday at the Geneva-based trade show, Telecom 99, Compaq said it was reorganizing its telecommunications business into a "single, highly focused" group and let on that it planned to expand its offering of wireless consumer products. That's all well and good, but given the state of Compaq's wireless offerings at the moment (hardly anything to write home about), there have got to be some larger undercurrents working here. Several analysts think investors are simply champing at the bit to jump back into this onetime powerhouse. But they're skittish -- and for good reason. "I think the stock is being moved largely on third-quarter expectations, and personally, we think the quarter looks fine, absolutely fine," says ABN AMRO analyst Jonathan Ross. "But there's a lot of debate [about this], and the pendulum sort of swings back and forth. Now, it's swinging in the right direction." Since April, the pendulum has been swinging in the opposite direction. Compaq stock is down 47% since the beginning of the year, largely due to a series of disappointing earnings reports and the ouster of its former CEO, Eckhard Pfeiffer. But recently, a couple of analysts have been talking Compaq up. Ross was the first bull to show his head again when he upped his rating to Outperform from Hold last month. His report said that Compaq's share price had "admirably weathered a number of body blows" and already reflected the risk of further turmoil. More importantly, he said, the company had taken its first steps along the road to recovery as evidenced by "booming" Internet sales, positive momentum behind its Alpha servers and continued restructuring of the retail channel. Earlier this month, Credit Suisse First Boston analyst Michael Kwatinetz said the psychology around Compaq's stock could change if it just met the consensus expectation when it reports Oct. 26. The First Call consensus calls for five cents a share, compared to seven cents a year ago. ABN AMRO's Ross agrees that it's just going to take a whisper of good news for investors to play Compaq again. "People are just waiting to pile in," he says, adding there's "huge" institutional interest. As for what impact the Sept. 20 earthquake in Taiwan could have on Compaq, Ross says the PC maker's suppliers have weathered the worst of it and are managing the situation. If obtaining certain types of chips does turn into a significant problem, he thinks Compaq will leverage its buying power to get the components it needs. Ironically, Compaq has had a troubled history of holding too much inventory. Now, that could actually be a plus. E