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

To: Andreas who wrote (80492)	3/30/2000 3:28:00 PM
From: Captain Jack	Read Replies (1) \| Respond to of 97611

Andreas-- just saw 195K go by at 26,, maybe that says someone thinks it just might be worth that,, maybe it was a sell who would buy that much unless they already were committed..

To: Andreas who wrote (80492)	3/30/2000 4:24:00 PM
From: Seamus McKenna	Read Replies (1) \| Respond to of 97611

< Hysterical?? > Shares go up, shares go down. Today DELL, GTW, HWP, MUEI (much favoured by the Captain in the past) as well as CPQ are all down. IBM, interestingly, is up. If your time horizon is a week, then there is a problem. I hope it's longer. SMcK

To: Andreas who wrote (80492)	3/30/2000 5:00:00 PM
From: The Duke of URL©	Read Replies (1) \| Respond to of 97611

"7. Article today in CNET highly critical of cpq's strategies and describes those strategies as failing." Do you have a linc to that article? TIA Duke

To: Andreas who wrote (80492)	3/30/2000 11:28:00 PM
From: rudedog	Read Replies (1) \| Respond to of 97611

Andreas - re: Need I continue? Please, if you can, rebut any or all of the above 8 points which are accepted facts in the market place. Allow me to take a stab at this - although I am almost embarrassed to do so since the facts should be well known to anyone who has read this thread. The short summary is that your 8 points are either wrong, incorrectly interpreted, or prove that CPQ management is in fact being consistent and executing to plan. 1. CPQ has dropped 18.5% in one week. Well, for starters I think CPQ dropped 7.2%, not 18%... second, everything in my portfolio dropped over the last week. Those well known dogs CSCO, INTC, MSFT, DELL, and JDSU all dropped more than CPQ. So did CIEN. NOK dropped nearly as much. Just to get some consistency, I used closing prices from last Thursday from the Dreyfus Brokerage Services historical quotes site ( tradepbs.com ). To determine the drop or rise I used the formula (Pl - Pt)/ Pt where Pl is the closing price last Thursday and Pt is the closing price today. Here's the layout on my core portfolio: CIEN -25.7% CPQ -7.2% CSCO -7.8% DELL -8.2% INTC -9.5% JBL - 2% JDSU -13.9% LU - 1.9% MSFT -8% NOK -6.5% TYC -4.2% Based on your notion that CPQ had terrible performance, and looking at the rest of my core holdings, I might as well sell everything and get into T-Bills. 2. CPQ has lost market share to dell and hwp in the month of february. This is equally silly. CPQ has stated since Capellas took over that profitability of the PC business is the goal, not market share. So losing market share, while not a goal, is consistent with their stated objectives. PCs are a commodity business and CPQ is shifting its revenue and center away from that business. But you missed an even more important point. The figures regarding HP are sales at retail. CPQ stated that they intend to move 40% of their PC sales to direct by the end of the year. Guess what, that means less retail sales. It also means more profit, since there are at least 9 points tied up in selling at retail. This may just mean that HP is not making a clean transition to direct, or has decided to be the last man standing in the retail PC business, along with eMachines. 3. CPQ's pc segment is focused on the low-end computer price segment which has seen a drop in average selling price in february after increases in sept. through jan. CPQ offers a full range of products at every price point. But the stated strategy is to drive commercial PC ASPs down, which has 2 benefits to CPQ - it reduces the overall proportion of revenues from PCs in the corporate mix, which is desirable since PCs are an increasingly low margin commodity business, and it pressures CPQ's competitors who do not have as much enterprise business. It is entirely consistent with their stated business plan. 4. CPQ's ipaq computer is selling at a ho-hum pace. According to company spokesmen, the iPaq is selling at twice the projected rate. If iPaq sold any faster, CPQ would not be able to meet demand - even doubling production rates on a new product is a hard thing to do. I suppose it might induce some people to actually buy some of DELL's WebPC products... but what would you call a successful product, if a product which is selling at twice expected rates and is straining production capacity is "ho hum"??? 5. Management refuses to respond to rumors of missing earnings thereby lending tacit acceptance to the rumors. Exactly as they should. I see no benefit to knee-jerk reaction to rumors, especially during the quiet period. I realize that many on this thread want to see CPQ management jumping out (as others have done) and countering rumors. I like the current position just fine - it also happens to be consistent with their position since Capellas took over. 6. CPQ's composite profit margins are expected to drop. I can't imagine where you got that idea. We see CPQ moving out of the retain channel. Even if those are not being replaced with direct sales, that is all the lower margin business. The high margin business is in the enterprise segment. So all of the data suggests margins should go up, not down. 7. Article today in CNET highly critical of cpq's strategies and describes those strategies as failing. I can find at least as many articles saying CPQ's turnaround is on track and the stock will double in a year, or in 6 months, as articles saying the company is falling apart. But both of those are just opinion... why would some yokel from CNET be any more credible than the other people commenting on CPQ? I don't believe that any of them have a better idea than we do about what's going on. 8. Institutional ownership is dropping. That's been going on for 18 months, why should it be any more important now? I think that the issue comes down to this - CPQ management has developed a plan for turning around the company, and has articulated that plan. They appear to be executing consistently. Their positions and policies are also clear and they are following those directives as well - like the "no favorites" communication plan. Those who believe that those policies will turn the company around can hold the stock comfortably. Those that do not think current management policies will turn the company around should sell, since it looks like management intends to execute to the plan. I am increasingly comfortable with the direction and prospects.