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Non-Tech : CompUSA (CPU) -- Ignore unavailable to you. Want to Upgrade?

To: epicure who wrote (565)	6/22/1998 1:18:00 PM
From: Bobo	Read Replies (1) \| Respond to of 3187

So far the street seems to like the deal. THAT is good news. It sounds like they got a pretty good deal even though they would not say it like that in the conf call. Analysis...It costs CPU about $2.5mm to open each new store. They paid $2.7mm per Computer City store if you net out Computer City's non-retail business. Even if you figure that CPU closes a third of the stores (which is probably a bit high), they paid $4mm per store that already has established sales and got the non-retail business for free. Currently each store in CPU has a market value of $6.9mm. Assuming that CPU can increase store sales to $6mm of the 66 Computer City stores it keeps open, it can increase the company market value by $130mm dollars or roughly 10%. This does not include added value from the non-retail addition of business which ought to be higher margin. I guess the unknown is whether the closings can keep cannibalization of same-city stores to a minimum. Tandy was awful anxious to dump these stores. I think the biggest challenge will be how quickly CPU can integrate the stores into their systems. Mgt stated that the deal should be additive to earnings in the first 12 mo's. I wonder if this is a bit aggressive given that CPU has not done any big mergers like this.

To: epicure who wrote (565)	6/22/1998 1:24:00 PM
From: Xpiderman	Read Replies (1) \| Respond to of 3187

CPU bought Computer City, I bought CPU stock. CPU is a good buy at this price level: it is trading at multiple year low P/E, now with improving TA chart. The Computer City buy-out only make it more dominate in its field, and deserve higher P/E multiples. With next year's estimate EPS of $1.42 and a average P/E of 30, my target price for CPU is $42. If the EPS growth is somehow fast than current estimate, which I believe it will, CPU will enjoy the expansion of both P/E ration and EPS estimate. Cheers, XyZ