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

To: Elwood P. Dowd who wrote (71696)	11/12/1999 9:29:00 AM
From: rupert1	Read Replies (1) \| Respond to of 97611

El: Obviously, I didn't hear what Kumar said. But his reference to droves of people leaving COMPAQ might provide an opening for someone from the company to come back with the observation that that is the plan! COMPAQ is trying to reduce the head count by a further 7,000 and, if The Register sources are to be trusted, 5,000 or so will be let go within the next few weeks to add to the thousands already let go. In this atmosphere I would not be surprised to see people leaving early as they make alternative arrangements. Kumar seems to have missed the point (a) in failing to note that about half of the $400 million shortfall in revenues in commerical PC's is attributable to the reduction of inventory in channel and (b) that the "turnaround" in earnings and share price does not have to await the "turnaround" in operating profits. The huge cost savings which will start to appear on the bottom line in 4Q and will continue thereafter, will begin the recovery in the net earnings and the share price. The turnaround in operating profit will take time to pick up steam but by the 2Q the market will begin to buy earnings for the second half 2000 and first half 2001. At some point - probably July 2000 - when the price is in excess of $40 - Kumar will reiterate a BUY rating ( if he still has a job).