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

To: Jason Hall who wrote (30279)	8/3/1998 8:57:00 PM
From: Mike Fredericks	Respond to of 97611

Anyone have any idea why the Jan 2000 $45 are so cheap? At $4 they seem grossly undervalued. Am I looking at the right LEAP here, or what? I think the symbol is .LKPAI The options are only cheap if you think the stock will be higher than $49 in Jan of 2000. I would bet that the options are priced reasonably fairly given Black-Scholes modified slightly because these are American options. No, I don't understand the math behind Black-Scholes, but there are options threads on SI where you can find that stuff out. Think about it though - what's the historical percentage gain of the stock market - 10-12% per year? For CPQ to be at $49 by Jan of 2000, it has to rise over 50% in less than 18 months. I personally think it will, I am long 2 LKPAG's (Jan 2000 $35 call leaps). Hope this helps -Mike

To: Jason Hall who wrote (30279)	8/4/1998 11:49:00 AM
From: Jason Hall	Read Replies (1) \| Respond to of 97611

Compaq Consolidation Emphasizes Manufacturing (08/04/98; 9:56 a.m. ET) By Joe Wilcox, Computer Reseller News Looking to cut costs and eliminate overhead from its Tandem Computers and Digital Equipment acquisitions, Compaq is quickly consolidating its manufacturing operations. The company (company profile) started the process June 29 and is consolidating first its North American operations, where sales are stronger. Greg Petsch, Compaq's senior vice president of manufacturing, said the company is taking the "McDonald's approach" to PC manufacturing. All operation changes or new facilities must be up and running three months after they are announced, said Petsch. McDonald's takes a similar approach, by setting a finite period between the announcement of a new restaurant and its opening. Petsch said Compaq's aim is to deliver systems within five days of an order, and in most cases, three to four days. Digital's Kanata, Ontario, facility and a portion of Compaq's Houston headquarter operations are being converted to configuration centers. Eighty-thousand square feet of the 450,000-sq.-foot Kanda facility will be used for configuration. Petsch said the Kanata facility would be used for final configuration only, and though it's important to Compaq's overall Optimized Delivery Model strategy, it would not be used for channel assembly. The company defines configuration as final assembly and testing. Compaq will also convert 500,000 square feet in three Houston headquarters buildings used to manufacture printed circuit boards for the configuration operation. The company will no longer produce the boards for PCs; it will buy from third parties instead. It will continue making circuit boards for workstations and servers. "Printed circuit boards [motherboards] are labor-intensive from a direct and indirect headcount viewpoint," Petsch said. "In terms of the motherboards, that's a wise move," said Lindy Lesperance, an analyst with Technology Business Research, in Hampton, N.H. "What they're trying to do is to cut costs and improve overall efficiency. That's a good thing." Compaq laid off 1,000 employees in Houston out of 5,000 employees worldwide in manufacturing and an expected 17,000 in all operations worldwide. The bulk of the overall layoffs affect Digital, based in Maynard, Mass. Analysts said they speculated the company would make the layoffs all at once, rather than carry the operational-expense burden over time. But logistical problems, especially with trade unions in Europe, compelled the company to streamline at a slower pace, said Lesperance. Compaq officials said the North American layoffs would be mostly completed by year's end and the rest of the world by the end of 1999. Value-added resellers and retailers will absorb the bulk of the regional distribution and direct-ship orders as Compaq realigns its Houston warehousing and logistics operations and its Kanata facility, Petsch said. He said eventually, Compaq would gear its manufacturing logistics to ZIP code, so the right facility would respond to channel orders. "When you think of the United States as the largest market in terms of volume, you can think of North America as being covered by Kanata; Fremont, [Calif.]; and Houston," Petsch said. The Fremont facility produces Himalaya servers acquired as part of the Tandem acquisition. Last month, Pioneer Standard Electronics, in Cleveland, became the first distributor to move Himalaya servers.