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

To: Racso who wrote (56009)	4/8/1999 7:18:00 AM
From: rupert1	Read Replies (1) \| Respond to of 97611

THe Register Posted 08/04/99 11:20am by Mike Magee Deep schisms mar Compaq 64-bit plans Sources close to Compaq revealed today the depth of bitter antagonism between its two server divisions, with bush fires breaking out over the Alpha-Merced roadmaps. The source, who declined to be named for obvious reasons, said: "There is a fundamental issue with Compaq, and that is they have two different server divisions trying to drive forward different strategies." She said that the high end server division, headed up by Jesse Lipcon, and which came from the Digital camp, was "gung ho" about the Alpha platform. But the server division which existed at Compaq before it took over Digital, felt similarly about the x.86 architecture. The source said that these two divisions were slogging it out internally and that Compaq would be forced, sooner rather than later, to resolve the damaging in-fighting. No one had yet made those hard decisions, she said. "This is a fundamental schism in the Compaq business." While Alpha production was being ramped up by Samsung, it was a very different business selling machines using them rather than fabbing them, she added.

To: Racso who wrote (56009)	4/8/1999 8:24:00 AM
From: rupert1	Read Replies (1) \| Respond to of 97611

Racso: I will defer to rudedog to interpret the significance for COMPAQ of the AMD numbers. With reference to institutional holders, block buying and net money flows. The picture looks stable or strong. What it doesn't show is what the average price of the institutions was and what price they are prepared to continue to buy or hold COMPAQ. It would be interesting to know where the selling is coming from when it reaches the top end of its very recent trading range, around $33. I think we have arrived at the stage now of "no conviction". The remaining nervous holders are not convicned enough to dump the stock in huge quantities and at a loss and the buyers are not convinced that they cannot get it lower. If there were to be a clear message from the earnings and forward guidance, it might cause a huge rush in either direction. I think the news will be good enough to embolden the holders and attract a few buyers and upset the remaining shorts - and I would not think there are too many of those - but the company cannot stop the armchair theorising of the analysts and guru-journalists who want to keep spinning stories about the end of PC's, the YK2 problem and so on. Its good to remember at times like this how quickly these fashionable preoccupations change. It was just about 6 weeks ago that COMPAQ was the best thing since sliced bread and about to uncoil enormous pent-up earnings power. Monica (remember her) was the centre of American political life and affecting the stock market and Kosovo was unheard of. This time last year, the world economies were about to collapse in a domino theory which would have us all vulnerable to what was happening in Russia. Those listening to the jim kelleys of this world missed out on a run-up from $23 to $51 in two and half months which outpaced even the run up of DELL during that period. COMPAQ will announce all-time high unit sales, all time high revenues, increases of more than 40% in high end services, but maybe 300 million short of the most optimistic estimates of $10 billion. Some of that shortfall will be due to Brazil devaluation problems and other non-sales problems. Margins will be slightly down in PC's but up in other lines and services. It will handily beat the street average estimates of $31-32 and, with the help of tax credits, I think my 38 is still attainable.