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

To: Jimbo Cobb who wrote (22300)	3/17/1998 7:09:00 PM
From: Adam Nash	Read Replies (1) \| Respond to of 97611

My $.02 on CPQ these days: I've seen some interesting comparisons with AAPL and ORCL recently, and it got me thinking, but in a different way than I've seen here. People are recommending shorting AAPL, and I think that's a bad call. AAPL is recovering (finally) from some of the same problems that CPQ is just starting on. In 1995 (if people can remember that far back) Apple had posted incredible revenue growth, and some fairly good earnings numbers. However, weakness in the summer had led Apple to an inventory glut, which was dealt with poorly. What happened? Apple's first loss in many quarters, I think it was $96 million on revenues of 3.1 billion. What's the point? Well, inventory problems are serious, and a monitor bundling sale won't solve the problem. This is not like Oracle where they'll be able to recover via services and software sales in 1 quarter. This is a 2-4 quarter issue, not because of the inventory, but because once the snowball gets going, all of a sudden Compaq has more trouble selling through the channel, people read about problems in the paper, etc. Pretty soon, the CEO gets attacked publicly by analysts. Anyway, CPQ is fortunate - since they are tied to the MSFT/INTC bandwagon, they don't have to fight standards like Apple does. I do find it interesting that HP's advertising is forcing CPQ to proclaim it's dedication to UNIX - an interesting strategy to blunt CPQ's Windows NT message. That will work in Dell's favor. In the end, if you own Compaq stock, you own a great company who has one of the brands that will be around. Hold it, and when things seem to settle/turn, buy more. Feel free to buy on the way if you don't want to risk missing the bottom. If you don't own CPQ, definitely wait until CPQ trades at maket P/E or below. This will turn, but not in 1 quarter. You've got time. As for Apple, this is not a safe short. It is a short trap. If you don't understand the strength in Apple's current plans, then you are going to get burned.