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

To: Elwood P. Dowd who wrote (92372)	7/27/2001 10:46:33 PM
From: Piotr Koziol	Read Replies (1) \| Respond to of 97611

Analysts are salivating at Compaq's "nuggets" from the CC: Industry analysts chime in on Q2 financial results 30 July 2001 Wednesday’s release of company financial results from the second quarter has evoked much commentary from the financial industry. The following are excerpts about Compaq’s earnings, as well as our goal to transform our company, from major news and financial services analysts. "We feel the company is ready to turn up the volume and lead sales from a service focus going forward. Service will continue to be a key focus area for the company as it hired over 700 new service professionals during the quarter." – AG Edwards "While the magnitude of the transformation that Compaq is attempting is significant, there were some positive signs in an otherwise weak Q2 report that show Compaq is making some progress. Noteworthy in this regard was: the success in reducing operating costs, improvements to channel inventory and the supply chain and signs of gaining traction in its services business." – JP Morgan "They're poised to be a significant beneficiary if and when the macro environment is better." – Matrix Asset Advisors Inc. "Despite an exceptionally weak environment, we are very impressed with the operational excellence and discipline that Compaq is demonstrating. We believe Compaq is doing the correct thing by accelerating its efficiency improvements. The strategy is clear: With demand very weak, and revenue going to be weak, why not take the opportunity to reduce inventory at a time when the company will not be penalized for it while working very hard on the cost side to drive earnings. Then, when the environment improves, Compaq would have a better operating cost structure and lower inventory levels, which should generate significant upside leverage." – Merrill Lynch "We think there’s a lot of good nuggets in what they reported in the second quarter. They did show very good reduction of inventory levels in the channel and at Compaq themselves." – Robertson Stephens "The near-term PC market remains weak, but we believe the opportunity exists for Compaq’s momentum to recover by late 2001, with reduced inventories, increasingly streamlined operations, something of a seasonal lift in the broader PC market and the potential for a corporate PC upgrade cycle driven by pent-up demand and the three-year anniversary of pre-Y2K buying starting Q4." – ABN Amro "We believe that the next few quarters are going to be crucial for Compaq as the company attempts to transition its business model to focus more on higher gross margin professional service opportunities, attempts to shore up its Access Business Unit and continues to drive growth through its server and storage businesses." – Wessels "They appear to be planning for some narrowing of the cost gap. The services business does seem to be the bright spot." – Bernstein "Compaq is very proud of its restructuring progress, its inventory management and its balance sheet improvement, and indeed these are pluses in the company's performance. The company plans to stress product innovation where possible, stress services, and do as much solutions marketing as possible. Offsetting this, however, is severe competition and difficult pricing in virtually every area the company operates in. Until there are signs of relief, we are going to keep estimates conservative." – Buckingham "A lot of the bad news is out there. Also, we like where the company is going fundamentally long-term, wrapping its business model around more of an enterprise model, moving away from PCs." – J.P. Morgan Chase "We think that the main concern relates to how optimistic the company is being about its opportunities in services and the underlying revenue support potential of the hardware businesses, particularly business-critical servers and PCs. We think progress is being made, but it will be difficult to prove until Q4." – Morgan Stanley "Positively, we believe the company is taking steps in the right direction to reduce its cost structure and right the ship, which is helping to cushion what would otherwise be disastrous declines in profitability." – Prudential Securities "They need to be more like IBM, and that is the direction they seem to be taking." – Technology Business Research "To [us] the thing that jumps out is that their guided EPS looks pretty good. That suggests some of the work they’ve been doing on expense control, from reducing employees, reducing inventory, getting turns up, all those kinds of things are starting to pay a little bit of dividend." – Wit SoundView