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

To: Elwood P. Dowd who wrote (77100)	1/29/2000 8:41:00 PM
From: Salah Mohamed	Read Replies (3) \| Respond to of 97611

El ... About Barron's Article <<< >>>"wild statements"/Oh dear - don't they ever read the COMPAQ web site!<<< Before firing a less than subtle round at Salah's #77039 >>> Victor can fire at me, I'm a big boy, I can take it. The unfortunate thing is he doesn't know the difference between "wild statements" and "mild statements". He jumped allover the 15% to 10% revenue growth rate without reviewing all the available info at this time. It was clear to me then and it is clear to me now that all what MC said is that they will meet the analysts EPS estimate with revenue growth of 10%, but he never changed his 15% revenue growth. Now, about Barron's statement: >>>However, in order to beat the Street's earnings estimate, Capellas admitted that Compaq needed to sell some of its stock market investments to pad profits.<<< In fact, this statement is very nice. It talks about beating earnings estimates while in reality CPQ missed the estimates by 3 cents. Let's go back to Q3-99 CC, in the CC, MC said they will take a charge of $50M to $100M for NT on Alpha and this will factor in the Gross Margins. After the CC, the analysts figured that this charge will be ~$75M before taxes resulting in reduction of the EPS by ~3 cents. That is why the estimates dropped to 16 cents from 19 cents. However, in Q4-99 CC, MC said that this charge will be taken in Q1-00 and Q2-00. In summary, CPQ missed the estimate for Q4 by 3 cents, and because he didn't give any guidance and the numbers were close enough there was no warning. This is not to say that Q4 results were disappointing. IMO, the results were encouraging, the revenues were at the high end of estimates and the operating margins improved by about 1.5% despite a drop in the gross margins of 1.1 mostly due to increase in components pricing, I think.