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

To: Sonny McWilliams who wrote (15040)	1/26/1998 4:51:00 PM
From: D.J.Smyth	Read Replies (1) \| Respond to of 97611

these two factors alone <<"...First, Digital has a cash stockpile of about $2 billion, or nearly half the cash Compaq plans to spend on the acquisition. Also, Digital has about $2 billion in operating loss carry-forwards that Compaq can use as an offset to future earnings, which will reduce its tax burdens in coming years...>> help pay for nearly 1/2 of the purchase of Digital. Digital is expected to earn $2.30 in 1998, but with synergism and Compaq connections, those earnings could be higher depending on how Compaq intigrates the two operations. i've not seen anyone calculating any revenue stream from year 2000 servicing for digital either

To: Sonny McWilliams who wrote (15040)	1/26/1998 5:29:00 PM
From: Ibexx	Read Replies (2) \| Respond to of 97611

Sonny and thread, Another positive article on CPQ/DEC merger: _______ Monday January 26, 4:37 pm Eastern Time FOCUS-Compaq/DEC could build big position in Europe By Neal Boudette FRANKFURT, Jan 26 (Reuters) - Compaq Computer Corp (CPQ - news) should be able to use its surprise $9.6 billion takeover of Digital Equipment Corp (DEC - news). to build an even stronger position in Europe, analysts said on Monday. ''This basically gives Compaq the reach it needs to tap into corporations in order to become one of the top computer,'' said Terry Earnest-Jones at market researcher International Data Corp in London. The merger ''will take Compaq a very long way in achieving its goal'' of rivalling IBM Corp (IBM - news) and Hewlett-Packard Co (HWP - news) for leadership in the computer systems industry, he said. Philip Williams at Dataquest said he expected the deal to have ''pretty positive'' results in Europe, where Compaq is the leading PC supplier and Digital has a broad array of corporate customers. ''Compaq is looking to move up into the higher-margin server business and Digital will do that for them,'' he said. The takeover, in which Digital would become a wholly owned subsidiary of the Houston, Texas, PC maker, would give Compaq a vast computer service business in Europe as well as several manufacturing plants in Scotland and service centers in Ireland and Germany. While the merger is likely to result in layoffs in the United States, consolidating the two groups in Europe would probably take more time, the analysts said. ''They will probably take a while to decide how to move forward,'' he said. ''You can't move as quickly on this in Europe as U.S. companies usually do.'' But in the PC business, where the two are competitors, Compaq may be able to use Digital's European facilities to expand sales. ''They may need the extra manufacturing capacity. They have been expanding rapidly,'' Earnest-Jones said. More importantly, Compaq will gain access to a customer list that includes major European companies such as British Telecommunications Plc (quote from Yahoo! UK & Ireland: BT.L) and Credit Suisse (CSGZn.S). Compaq is the world's largest PC maker with $24.6 billion in sales last year. In Europe it is number one with a 16 percent market share, according to Dataquest. Last week the company said European sales rose 33 percent in 1997 to $7.94 billion, powered by a 52 percent jump in fourth quarter unit sales. Digital, on the other hand, has struggled to balance its commitment to PCs based on Intel Corp (INTC - news) processors and to larger machines based on its own Alpha chip. In the year ended in June, it reported net income of $141 million while sales fell 11 percent to $13 billion. It has also had mixed results in Europe, where its German unit has been unprofitable. The companies reportedly discussed a merger about a year ago, with Compaq mostly interested in Digital's large computer service organisation, but the talks broke down. Although the companies agreed to the merger on friendly terms, the analyasts said it could still encourter difficulties. ''It is a big switch to go from the high-growth fast changing PC market that Compaq is in to the broader corporate computer market,'' Earnest-Jones said. ''And the size of the combined organisation will be a challenge.'' Compaq has 18,900 employees, and Digital 54,000. The analysts expected Compaq Europe chief Andreas Barth to run the combined European organisation. However, Williams said the union of two of the world's largest computer makers could cause some Digital managers to leave the company. ''It will be difficult to justify having two management organisations in place and the Compaq style is more aggressive than the Digital style, so there may be cultural differences,'' he said. ''There will certainly be areas where the two organisations can't co-exist,'' he said. ______ Ibexx