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

To: rudedog who wrote (70669)	10/31/1999 8:39:00 PM
From: jim kelley	Read Replies (2) \| Respond to of 97611

Dog, Assuming that CPQ grows revenues by 12-15% per year and earns $2 for Y2000, I calculate a stock price of $24 to $30 dollars per share. No premium should be placed on growth below the market norms IMO. But this is hardly the double whereof you speak. That would require a stock price of 36-38 per share. It is also possible for CPQ to incur further losses in its effort to reduce OPEX. They have to pay for the layoffs. In Europe, I think they have to pay a year salary per laid off employee. Including those restructuring charges I doubt if CPQ will make a profit in Y2000.

To: rudedog who wrote (70669)	10/31/1999 11:03:00 PM
From: Windseye	Read Replies (2) \| Respond to of 97611

<<< Ican not tell from the numbers what impact the SMB initiative had, but if the group had profitability only equivalent to the consumer group (in percentage terms), and had no inventory charges, the overall number for CPQ would have been about $350M better - they would have reported .25 or better instead of .07!>>> Hmmm, after doing similar calculations based on the earnings report I come up with the same number, .25 /shr based on only 4.3% profitability in the consumer product group and assuming the $200 mil was not sold out of channel. I agree it makes sense in SMB to nurture large accounts and forget competing with Dell for the SNB white box accounts (unless it can be done selling well on the web site). In the longer term, perhaps one year, though, isn't the real competition going to be who offers the best solution to the combo device--- wireless net and phone access, and PC functionality without the complexity? The commercial group success in the next year or two may depend on meeting these market needs first and best. How does CPQ stack up here? Doug