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

To: Elwood P. Dowd who wrote (58969)	4/20/1999 5:36:00 PM
From: Night Writer	Respond to of 97611

El, I think what we discussed about quality of earnings is out the window. New Management is on the way. EP and EM were caught in a Catch 22 on the earnings announcement. WS was going to crucify them no matter how the earnings turned out. Now there will be a different attitude. Compaq is on WS probation and not on the $hit list is my guess. NW

To: Elwood P. Dowd who wrote (58969)	4/20/1999 5:41:00 PM
From: rupert1	Respond to of 97611

If the 15 cents includes tax credits the Street will basically discount the tax credits and recognise the net figure as the earnings . Last time the earnings were 43 cents but the street complained that 5 cents were credits. It is possible that the 15 cents included tax credits, but given what EP said about the very rough figures they were using and the difficulty of computing them, how could they do such a sophisticated thing as include tax credits? If the tax credits were not included - there are $2.9 billion of them available (but there will be conditions on their use) - I would tend to think that they may add another 5 cents, making the earnings 20 cents. Whatever the street says about the after credits number, we should realise that tax credits are a genuine part of the earnings picture. The DEC and Tandem acquistion were costed partially on the basis of what tax credits might be available from them. Taxes not paid really do add value to the company's earnings. The other big imponderable is whether the Brazil devaluation losses were included in the 15 cents or whether they are going to be treated as a one time charge. In his infamous leak to Credit Suisse in February the Artful Dodger (Mason) said the Brazil thing might represent $200 million or 2-3 cents a share.