If some one said CPQ will bottom at $15, or CPQ will be $50 in one month, it is pure imagination and prejudice. If you think about the size of the revenue, and the potential of
this company, especially merger with DEC, I would say the possibility of CPQ dropping
to teens is very remote. In the next one week, the chance that CPQ will fluctuate between
$24 and $28 is 60%. The chance that it will drop to the $22 range is about 20%, the chance it will shoot up to $30 is 20%. There is no clues that DEC will miss its earning this quarter, so
the speculation that DEC will miss is pure rumor or imagination. On the contrary, DEC has made
money constantly every quarter since Dec of 1996, except every Sep of each year DEC's profit and revenue will be little bit leaner, this may be cause by the slow down of Europe
every summer due to the summer vacation every year, and this indicate to me DEC has
a strong business in Europe. Eurpe is now strong, I do not see the possibility that DEC will
miss this quarter. Due to the merger, DEC probably will do its best to show a good earning for this quarter. In the past one year , without CPQ's long term back up, DEC manage to be
on a recovery path, and now with the marriage with CPQ, this will guarantee to the corp
IT manager that DEC will be in the market for long long time and the support , new product
development will continue and DEC/CPQ will exist for the years to go, this definitely give
DEC's business a big push. Whenever the IT manager decided t spend millions of $ to buy their computer systems, the first question comes to mind is will DEC ever exist in one year.
The marriage with CPQ of DEC will guarantee to the IT managers that DEC will be there all the time to offer the support and service to the products it sold. This will definitely help
DEC to eat into HWP's SUNW's and IBM's corp market share.
For the short term, DELL had the advantage due to its business model, but this model
is easy to copy , in a few quarters, all the box maker will implement the same business model.
Once , CPQ, IBM, HWP ..etc all implement the same model, at that time , what will be DELL's advantage ? This is ver questionable. So, long term, DELL is the most vulnerable company, while CPQ is the company with the most potential.
Pretty soon, we will see $1200 to $1500 note book computers powered with AMD's chips from CPQ, this will compete head to head with DELL's desk top which sold at a higher
price. If you are a buyer, you know your choice, with the same amount of money, will you choose a notebook or a desk top, I think the answer is very clear. Pretty soon , people will
realize the myth " INTEL INSIDE" is not justified for additional couple of hundred dollars, people will buy computer based on the Performance / price, instead of the name, people will buy features , instead of name. The 50% of profit margin INTEL enjoyed in those years will
pretty soon be history, and in the years to come , the most important class INTEL's top managers need to register is "COMPETITION". We will see INTEL's profit margin, market shares continues to degrade in the years to come in an environment of high PC growth year after year.
In every drop of stock price of CPQ, be it 1991, 1993, we always see those bears talk down the stock, however after every dip, we always see CPQ SHOOT UP WITH NO RETURN.
I do now think this time will be different, especially the DEC merger is pretty close, CPQ will be changed fundamentally, more strong. So, the claim that CPQ will be dead money for a long time is again pure imagination. When the stock price move up, it just move , and
will never tell you in advance. The only way not to miss the next big move is to build up your position right now. When people are depressed, it is time to jump in. Just look at thos net stocks, the INTEL when the floating point rumor circulated, the Orcl ...etc, Those stocks will always come back big and fast.
We see the big trading volume in the past couple of days, while stock did not drop big after the announcement, this give some signal to the market. The big boy short at the $37, to $30 level, and some buy at $27 to $28, and just yesterday, the big boys already jump in with 76 MM shares traded , and the stock did not drop at open ( the price at open $25 1/8 is actually
the closed price of after hour market of last Friday), and during the regular trading session of
the past Monday, right after the big announcement.
Good Luck to everyone. This year is a big year for PC business with the win98 is comming !!!!!!!!!!!!!!!!! |
