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

To: Elwood P. Dowd who wrote (18241)	2/26/1998 4:54:00 PM
From: Stonehenge	Respond to of 97611

FWIW Phil Orlando also recommends CA, MSFT, BMCS, PSFT, HBOC.

To: Elwood P. Dowd who wrote (18241)	2/26/1998 4:57:00 PM
From: Keith Howells	Read Replies (2) \| Respond to of 97611

Stephen & all, Here is something from Briefing.Com regarding CPQ. Keep in mind that they do not like the merger. This is actually the most positive thing that they have said regarding CPQ in quite some time. -Keith- Brief: What's wrong with Compaq? Leading PC maker being left in Dell's wake... Concern over the Digital deal some concern that earnings might be poised for a slowdown keeping stock under wraps... But Briefing maintains that these fears are greatly exaggerated... Though not big fans of company's decision to purchase the underperforming DEC, CPQ's relative valuations, strong industry conditions and better than market growth rates make it the most attractive near- to intermediate-term play in the industry... Look for a test of the low 40s within the month...

To: Elwood P. Dowd who wrote (18241)	2/26/1998 7:48:00 PM
From: Mohan Marette	Respond to of 97611

'Foolish' musings. Man,you beat me to that 'Motely Fool' thing. I hear that guy at Smith Barney isn't all that good with 'numbers' and hence his reliance on the 'realiable shmoe' at the shipping dock from Best Buy to come with this 'channel stuffing' thing. If you look at the brief comments by the 'foolish' kids you will know why. It looks like SB is pretty much alone on this one so far (seems again a bit slow) as everyone and his brother-in-law has been 'crowing' about this 'channel crap' for over a year. It is interesting to note that Compaq had already admitted to that fact they had a bit of an inventory problem a while back and they said they were addressing this problem seriously,I don't why an 'analyst' would know more about this than Eckhard or Mason ! Now to answer your question about whether CPQ will respond to 'these inventory problems' I would like to say they already have many times and I wouldn't be surprised if they issue a statement defending their turf as this wouldn't come under the SEC gag order and the merger,at least I don't think so. The problem with CPQ seems to be that the 'analysts' don't know what to make of the merger nor do they know how seriously EP and Mason are addressing the issue of the inventory.Either that or they are screwing around with investors' so that they can reduce the 'distance' between themselves and that fat year-end bonus checks. How's that for 'foolish musings' ???<g> ---------------------------------------------------------------------- Feb 26, 1998 (6:22 PM ET) - The Motley Fool Evening News PC maker Compaq Computer (NYSE:CPQ - news) lost $1 1/8 to $32 7/8 after the company was downgraded by Salomon Smith Barney to "neutral" from "outperform." Apparently the analyst at Salomon thinks the company is carrying too much inventory, which could cause problems in the near term. Using Compaq's latest 10-K filing, one can determine that the costs of goods sold during Q4 was $5.3 billion, while the average quarterly inventory balance for the fourth quarter $1.79 billion. Based on these figures, the company turned its inventory 2.96 times during the quarter, or about once every 4.4 weeks. During the previous three quarters, Compaq turned its inventories an average of 2.55 times per quarter quarter, or about once every 5.2 weeks. So based on those numbers, the company's inventory controls are actually improving rather than getting worse. However, the company turned inventory 3.1 times in Q4 1996, or once every 4.18 weeks. Year-over-year, then, it does appear that inventory management worsened. If margins increased year-over-year with Compaq's new approach, though, the slowdown in inventory turns would be mitigated from a capital efficiency perspective.