Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

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

To: Michael who wrote (1463)	3/5/1999 10:31:00 AM
From: Sonny	Read Replies (2) \| Respond to of 3187

Don't you think many will consider "hold" rating to imply that: "You hold, let us dump ours first, and then you do your thing". Another concern would be technical watchers: when the gen. market is up so beautifully this morning, CPU will show a horrible RS blimp to the weekend chartists, which may induce further selling Monday am, no? Sorry, have not been following this closely to really appreciate how it behaves in different scenarios. Thanks for the response.

To: Michael who wrote (1463)	3/5/1999 12:05:00 PM
From: Oeconomicus	Read Replies (1) \| Respond to of 3187

Michael, while I have a hard time believing that brick and mortar computer sellers will just fade away any more than other "big box" retailers and while the valuation looks on the surface like a steal, I thought I throw in a skeptical two cents. First, based on my own recent experiences with computer retailers, CPU would be a distant second to Best Buy on my list. Service, selection and prices were much better at the latter. Also, Best Buy always seems to be much busier even though the stores are around the corner from one another. Personally, I think Best Buy's business model of carrying a broad range of consumer electronics and music as well as computers and software is superior to CPU's more focused approach. Second, big box retailers fail all the time and, much of the time, no one steps up to bail them out by buying them. I used to think Sportstown was the greatest sporting goods store ever. Problem was same store sales weren't growing and they couldn't make money. It died a slow death ending in bankruptcy - Sports Authority bought most of the stores, but shareholders didn't get a penny. CPU bailed Tandy out of Computer City, but who is there to bail out CPU? Certainly not Best Buy or Circuit City. Third, CPU does look financially sound, but the $4 in cash kind of overstates it. Net of debt and other liabilities, and adding in other current assets, they have about $1 per share in net current assets. Cash flow is still positive though, even with the negative net they forecast, so I certainly wouldn't predict bankruptcy in the near future. Fourth, I have to wonder what doubts about CPU's future would do to sales of their CompUSA line of "made-to-order" computers. They tried this before I think with the "Compudyne" line and with plenty of other low priced lines out their, I doubt this adds much value even if they stick with it. I wouldn't count on that to turn them around anyway. Fifth, as far as their Web site goes, they face even stiffer competition there than in the brick and mortar world. Could this be the first major big box casualty of e-tailing? Bob