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

To: Ada Marie who wrote (32313)	9/4/1998 3:02:00 PM
From: rupert1	Read Replies (1) \| Respond to of 97611

Re: Bearish opinion e.g. Bernie Scaffer. He is saying that in the option market its 2 to 1 bulls. But despite this sentiment, the stock has not performed. In fact, it has fallen off. A contrarian investor would be a bear. I must say, that it has been a little uncomfortable counting the ever increasing number of analysts upgrading CPQ and the almost universal bullishness on this thread, while the stock has struggled to advance (with one or two exceptional days) and always fallen back. Who is selling into rallies?. (I exclude the last week - I think a lot of the selling has been because CPQ is such a liquid stock, it allowed lots of individuals and institutions which had to deleverage to get out quickly, probably with some profits if they were recent buyers). The bear case has it that given the groundswell of bullishness and the fact that the stock is so widely held, and given that expectations for next quarter earnings will probably create a whisper number to the upside of 6cents, there is potential for disappointment, and significant losses in share value in the short term. But this bear case is essentially technical, it is about the market. The bull case is essential fundamentalist. It is about corporate growth, cost reductions, improved margins, lower inventory costs, increased sales and diversification into profitable services. But this fundamentalist case needs hard evidence to get beyond $35-37. In the meantime, it must overcome worries that some overseas market are soft and that a slowdown in economic growth, even in the US and Europe, will put a damper on earnings going forward. I have been in CPQ some years when it has gone through prolonged periods of market doubt and, unlike some other companies which tend to leak their news early, I have seen it surprise the market in a big way on the day earnings have been announced. The question is if this is going to be one of those times. Even if earnings are, as promised "transitional", whatever that means, will the company's forward looking statement remain as bullish for the 4th quarter and FY1999 as EP made it sound last time, or will it be hohum.? Anyone want to comment? Victor