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To: Geoff Nunn who wrote (49166)	6/26/1998 11:15:00 PM
From: jim kelley	Respond to of 176387

Geoff, I do not think that companies always engage in the "proper strategy" that CTC stated. I could cite many examples where the ideal strategy was not followed. In CPQ's case, I think that they had an immediate short term objective that if not met could have adversely affected their intermediate and longer range objectives. Remember they were trying to purchase DEC and change the nature of their business. JMO Jim Kelley

To: Geoff Nunn who wrote (49166)	6/27/1998 2:24:00 AM
From: Chuzzlewit	Read Replies (1) \| Respond to of 176387

Good evening Geoff, Let me clarify. A rational approach to explain fighting for market share is premised on maximizing shareholder value. This implies maximization of the present value of future cash flows. Unfortunately, you are correct in your criticisms. Managers all too often act in their own interests rather than the shareholders' interests. Golden parachutes, profit sharing, repricing of options, highly dilutive friendly mergers ... the list goes on and on. Nevertheless, it is difficult to explain how a fight for market share increases manager's compensation when profit is compromised. I'm thinking that Compaq management just blew it. Perhaps they didn't count on the reaction they got from IBM and HWP. I've been thinking that those mergers using stock at a large premium over market may be another example one of those shareholder be damned transactions. If management is paid on a percentage of total profits rather than a formula based on earnings per share, that means that they look fovorably on any acquistion where there is positive earnings from the acquired company. Accretive for the management is not necessarily accretive for the shareholders. TTFN, CTC