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

To: Salah Mohamed who wrote (77571)	2/6/2000 6:14:00 PM
From: Andreas	Read Replies (2) \| Respond to of 97611

You're reading the right balance sheet incorrectly. Although there was an increase in "current liabilities" in the amount you state there was a corresponding increase in "current assets". Specifically, you will notice a new item in the current asset section called "short-term investment". You should also note that when analysts and others in the investment community refer to a particular company being debt free they are referring to "long-term debt". Short-term debt does not count for purposes of describing whether or not a company is debt free since there are short-term assets off-setting and both short term debt and short term assets are components of working capital which entails a different set of conventions for financial health. CPQ does not have long-term debt as of Sept. 30, 99. The more appropriate measure of cpq's short-term position is found in what is often referred to as its "working capital" position as measured by "working capital" (current assets minus current liabilities) and current ratio (current assets divided by current liabilities) and quick ratio (cash and marketable securities divided by current liabilities). These three measurments are typical measurements used to a measure a company's short-term financial health and to compare changes in same. Finally, I would point out that S&P lowering their rating has virtually nothing to do with cpq's financial position. They did not lower the rating because of any perceived deterioration in cpq's financial position because no material deterioration occured.

To: Salah Mohamed who wrote (77571)	2/6/2000 8:12:00 PM
From: rupert1	Respond to of 97611

Salah: I cannot agree that either you or I may be misreading the balance sheet. I gave you the facts from the balance sheet. You have not contested them. It is not a matter of opinion. The facts do not support your argument that CPQ needed to sell AV to survive because of the precarious state of its balance sheet. The borrowing you cited is not a sign of financial ill health. It was fully explained by COMPAQ. When you do your DD you will see that it was a deliberate strategic decision to take advantage of interest rate differentials prevailing in the market at the time as between the cost to COMPAQ of lending money for lease agreements and borrowing the money to finance such agreements and to secure cash flow.