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

To: Harry Landsiedel who wrote (53758)	3/18/1999 4:15:00 AM
From: rupert1	Read Replies (1) \| Respond to of 97611

Harry: Thanks for the "full" report from Bear Sterns, which, was of course "full" only in the passages you cited. In the passage about the cost of the "shortfall" a few words are added that were not in the fuller report posted by Aitch the other day. As a result, it would appear to confirm that Bear Sterns is saying that the combined "shortfall" from sales in the first six weeks and the devaluation write-off comes to 3/4 cents. Of course, CSFB was of the opinion that the 2 cents attributed by Mason to the devaluation was probably an exaggeration. The devaluation is a one time charge arising from the fact that CPQ receivables lost some of their value in US dollars after the devaluation of the Real. Bear Sterns use of the word "shortfall" is a bit misleading. The 1 cent arising from softness in sales in the first six weeks was an estimate of the cost to CPQ's plan - not consensus estimates - in the event that the remainder of the quarter did not make up the deficiency. Any "shortfall" would be from CPQ's plan and neither CPQ nor Bear Sterns know whether this has occurred yet. On this basis I can understand that Bear Sterns may want to be cautious and act as though there has been a shortfall against consensus estimates in the 1st quarter but I don't understand how it could increase the amount of the shortfall through the following three quarters. With respect to the dislocation issue Bear Sterns has still not made its case clearly. It appears to be saying that the progressive changeover from indirect to direct has caused disruptions which have resulted in a temporary dip in sales. But this is an inference without any evidence and one not supported by the company.