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

To: rupert1 who wrote (77818)	2/9/2000 3:27:00 PM
From: Andreas	Read Replies (2) \| Respond to of 97611

To Victor; Although your question is directed to Captain Jack, let me point out that Q1 99 is not likely to bear much resemblance to Q1 00 for the following reasons, and therefore a warning out of CPQ is highly unlikely: 1) Q1 99 was plaqued with a ton of inventory stuffed into the channel (7 or 8 weeks) in Q4 98 for the obvious purpose of exaggerating Q4 results. Q4 99 inventory has been reduced to about 2 weeks and therefore Q1 00 is not faced with a ton of inventory having the effect of reducing sales and increasing obsolete inventory write-offs. 2) G&A expenses are being reduced in Q1 00 unlike in Q1 99 (which saw an increase). In fact, a 10% reduction in G&A in Q1 00 will generate $600 million to the bottom line! 3) Demand in Q1 00 appears to be outpacing demand in Q1 99 due to a number of reasons including post y2K buying and strong consumer demand. 4) MC made the comment during conference call that early January sales were tremendous (or some similar adjective). 5) q1 00 will be the first full quarter with ibm out of the consumer pc picture. IBM was a factor in Q1 99. 6) MC has allegedly guided sales growth to 10 - 12% after initially stating that 15% was achievable. This is not entirely true. IMHO, MC decided not to quarrel with the more conservative 10-12% sales number proposed by Merril. After Merrill Lynch challenged MC and told MC that they doubted that 15% was achievable MC merely said that he would not take issue with the 10-12%. It is important to note that MC never repudiated his 15% figure! It is also important to remember that the 10 - 12% number did not come from MC! It came from Merrill Lynch! Therefore, don't be surprised to see sales greater than 12%. In conclusion, I am fairly confident that a warning will not be the case in Q1.

To: rupert1 who wrote (77818)	2/9/2000 3:29:00 PM
From: Elwood P. Dowd	Read Replies (3) \| Respond to of 97611

CPQ will not warn. Capellas knows he'll make the .17, cause he'll sell enough assets to make up the shortage. He has already explained that the sale of assets would be an ongoing practice and when he was asked(at the cc, I believe)if he was comfortable with the estimates, he said yes, whatever your numbers are. He either doesn't know the consensus or doesn't care cause he'll just cut loose some more Ask Jeeves, or whatever. The key is to watch what and how much they sell in the next 60 days. Did he ever say he'd make the earnings estimates WITHOUT the sale of assets? I don't think so, but I could be wrong. Even if he did, he still wouldn't have to warn if the consensus is .17 and he turns in .17. Of course, WS will kill the stock if he does that. El