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

To: rupert1 who wrote (54585)	3/23/1999 2:53:00 PM
From: PCSS	Respond to of 97611

I aint switching ... but would welcome those that do It would be great for a MAJOR UPside break through of 31 about now ... it would show me that soemthing was really brewing here Michael

To: rupert1 who wrote (54585)	3/23/1999 3:02:00 PM
From: Aitch	Read Replies (1) \| Respond to of 97611

victor, Maybe this will tempt a change in CPQ's direction: Compaq Computer Corporation (CPQ) -- Uncertainty Creates A Buying Opportunity 12:50pm EST 22-Mar-99 Janney Montgomery Scott (James M. Meyer, CFA) EARNINGS PER SHARE (Dec.) 1999E VS 1998 OLD NEW P/E RATIOS F1Q $0.31 VS $0.01 2000E $2.40 $2.40 12.5x F2Q $0.37 VS $0.02 1999E $1.72 $1.72 17.4x F3Q $0.43 VS $0.07 1998A $0.53 F4Q $0.61 VS $0.43 Yield: 0.2% Market Cap.: $52.09 Billion 5-Yr Growth Rate: 25% Dividend: $0.08 Rating: BUY (Unchanged) Target Price: $55 We believe it is time to sit back and look at Compaq beyond a two week window. As each day passes, Compaq along with other leading PC companies like Dell (DELL-$37) and IBM (IBM-$169) seem to get hammered on a rotating basis as evidence continues to mount that the first quarter is running short of expectations on both the top and bottom line. We think that the Q1 shortfall represents a combination of inflated expectations after the strong fourth quarter of last year and more intense competition in the SOHO market and in Europe as it gropes with the adoption of the Euro. In the case of the small business and consumer markets, expectations that Y2K demand would accelerate earnings growth in the first half seem to have been wrong. In fact, while corporate Y2K activity is strong, small business owners and home computer users seem to be deferring new purchases until the fall. This makes sense since these entities require less (or even no) testing and by fall computers will be faster and cheaper. Also, Q1 is notoriously a period of relatively few product introductions. 1999 will not the first year that Q4 momentum evaporates into subdued growth in Q1 of the following year. What we are saying is that any Q1 weakness does not mean that the long term outlook has changed. In Compaq's case, the company is transitioning from a box supplier to a full service computer company. It is still achieving synergies from the DEC acquisition, it is just beginning to build upon customer synergies (introducing the DEC customer base to Compaq and visa versa), it is achieving explosive growth related to the Internet as a systems integrator, as a supplier of servers, backbones and networking hardware, and as a supplier of boxes and accessories to end users. At present prices Compaq sells at almost a 50% discount to the market based on our estimate of F2000. Haircut our earnings numbers if you want by 10-20% and it still sells at a big discount. It also sells at a big discount to Dell which, in turn, still sells at a big premium to the market. The bottom line is that by the time the traditional strong fall selling season rolls around, we believe Compaq will be getting a lot of positive investor attention and, therefore, would use any further weakness as a very attractive buying opportunity. Temporary weakness in great companies creates outstanding buying opportunities. If one wants to be risk adverse and wait until after Q1 results are released, that is fine with us. But we believe this low point is a temporary one and the fundamental story for Compaq is absolutely the same and on target. The 40%+ correction in the stock price over the past two months reflects far more than a Q1 shortfall. We believe the fixation momentum investors have with the next three months is giving longer term investors a unique buying opportunity. Compaq is one of the world's three largest computer companies. With the 1998 acquisition of Digital Equipment, the company has transformed itself from a supplier of personal computers into a full-service provider of MIS solutions. Synergies from that acquisition are still accruing adding growth on top of expected unit volume growth of 15-20%.