To: Rob Rob who wrote (2771 ) 7/29/1998 7:10:00 PM From: Doughboy Read Replies (1) | Respond to
As the NY Times article pointed out a couple of weeks ago, a lot of the downward reaction to the stock is emotion. CA did not deserve the 45% haircut based on its warning; probably 20-25% was more reasonable. But money managers have a beef with Wang and Kumar on how they handled this: taking their precious options and then releasing news that sent the stock down the toilet. In the end, I suspect, Wang and Kumar came out about even, they increased their holdings by about a third and then they lost that much with the rest of us. (That's just a guess.) And, no two ways about it, that stinks. Shareholders vote with their feet, and they are simply walking away from CA. Without buyers and momentum, CA is going to drift down. The fundamentals are still good, and it may be a good value play, but I don't think that fundamentals are what is important now. CA is not going to get off the mat for a while, IMHO, until Charles is able to engender good will among shareholders. At a minimum, it'll take a few good quarters to get the bitter taste out of the mouth. A couple of things CA could do to turn things around faster: They could release more definite information about how long they expect soft sales; "several quarters" is just too vague. Better yet, they could move the stock a bit with some statements that the reaction of the market was overdone and that they still expect solid earnings by the second half of the fiscal year. Or they could announce a stock buyback. So, speaking of bitter taste in the mouth, is Gall right that we might fall into the low 30s? Yeah, I'll go along with that. With the "emotion" here and the fact that the NAZ bear market is creating other great values out there, I don't think there'll be many people out there who want a piece of a company that warned of flat earnings for "several quarters." That's my depressing assessment.
