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

To: Chris who wrote (20812)	3/8/1998 11:36:00 PM
From: Windseye	Read Replies (3) \| Respond to of 97611

Chris, I've been trying to assess the posts here over the last week and the weekend, trying for a summary that might allow be to proceed this week. Some of the ideas here are points gleaned from other posts, some are wild a$$ guesses based on lack of info, some are purely speculative, and some are semi-factual. Please, anyone, evaluate, judge, fill-in, argue... I'm as lost as anyone, with a fair amount down now. What will happen in the future--now and thru the year: A. 1st, 2nd, and 3rd quarters will be weak; 4th show growth. 1. INTC is pushing Pentiums and Pentium PROs when the market KNOWS PIIs are where to be, soon. 2. CPQ will have to sell these in the North AMerican biz channels even when the market thinks that Win 98 won't run well on them (ok with 64meg or so) 3. CPQ trying to move to ODM (Optimized Distribution Model), a made up term for: "we're cutting back on inventory, changing the way and perhaps number(?) of dealers, and trying to copy DELL's BTO) 4. In order to justify layoffs of say 20,000 DEC people, assuming the buyout works out, as someone here suggested-- it is always easier to let people go when things look grim. Rather Machiavalian, but... 5. I still can't figure out who leaked info to Smith Barney and other analysts! WHo stood to gain? Was it CPQ management? Was it vendors who knew something about effects of the Asian currency rates dropping? Or the analysts acting independently? "Just follow the money..." B. My guess is that CPQ will trade in the 20-30 range over the next three quarters, and move up in the last quarter, assuming all the fixes are in place and the DEC integration is working. 1. They will probably have to write off a bunch, maybe 1 billion due to the layoffs and whatever costs of the merger might happen... including as someone mentioned the "goodwill" deduction from income... gee, if the stock price is lower, then this amount will be less, and earnings look better. How convenient.... 2. Earnings from the cheapy PCs must have been fairly good last year--- for the most part revenues and earnings last year were similar to the prior year, so maybe they really can make money on the cheapies as well. Challenges to these assertions? Please! Doug, befuddled in the USA