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To: Mark Peterson CPA who wrote (109340)	3/12/1999 8:51:00 PM
From: Ian Davidson	Read Replies (2) \| Respond to of 176387

CPQ shareholders not happy: Friday March 12, 7:43 pm Eastern Time Compaq hit by shareholder suits over Q1 warning PHILADELPHIA, March 12 (Reuters) - Compaq Computer Corp. (NYSE:CPQ - news) was named in two lawsuits charging the world's largest personal computer maker with concealing a PC sales slowdown earlier this year, plaintiffs lawyers said on Friday. The suits charge that the Houston company failed to inform investors in a timely fashion -- allowing several Compaq executives to sell stock at high prices -- ahead of a company warning which triggered a sharp drop in the stock on Feb. 26. The law firms of Savett Frutkin Podell & Ryan and Bernard M. Gross P.C. said they filed complaints in U.S. District Court for the Southern District of Texas on behalf of shareholders who purchased Compaq stock between Jan. 27 and Feb. 25. The separate lawsuits similarly assert that Compaq and certain company officials violated U.S. securities laws by misrepresenting or failing to disclose a slowdown in demand for and sales of Compaq's products earlier this quarter. As a result, Compaq stock was artificially inflated during the period covered by the suits, the attorneys alleged. The lawyers seek to recover damages on behalf of plaintiff shareholders. Both firms are based in Philadelphia. A Compaq spokesman said the company had not been served with any complaint and thus could not immediately comment. The suits stem from two weeks ago, when Compaq Chief Financial Officer Earl Mason told a group of investors vising the company's Houston headquarters on Feb. 25 that a slowdown in PC sales could hurt first quarter revenues and earnings. The official blamed weak PC sales in the United States and Europe -- especially to small and medium-sized business customers -- during the first six weeks of 1999. Word of the warning -- which came in response to an investor's question -- leaked out to Wall Street the next day, leading a number of brokerage analysts to urge investors to shed the stock. In response, Compaq stock tumbled $5.62 to $35.37 on Feb. 26, as 75 million shares traded hands in the heaviest day of trading in the stock's history. The blow-up dragged down other PC maker stocks as fears arose of an industry-wide downturn. A Compaq spokesman confirmed the comments by Mason later that day. Some Wall Street analysts criticized the chain of events as selective disclosure of damaging news by Compaq. Compaq stock has continued to trade lower since then, closing at $30.25 Friday, unchanged on the day, in composite U.S. stock market activity. Ahead of the revelations, and during the periods covered by the suits, several officers of Compaq sold hundreds of thousands of shares of Compaq common stock, the lawyers said.