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

To: marquis103 who wrote (59615)	4/23/1999 7:17:00 AM
From: Kenya AA	Respond to of 97611

Russ: Re CPQ earnings ..... EARNINGS PER SHARE Quarters 1995 1996 1997 1998 MAR 0.160 0.160 0.270 0.010 JUN 0.180 0.150 0.170 -2.330 SEP 0.178 0.240 0.330 0.070 DEC 0.060 0.320 0.420 0.430 Totals 0.578 0.870 1.190 -1.820 Note: Units in U.S. Dollars

To: marquis103 who wrote (59615)	4/23/1999 9:06:00 AM
From: rupert1	Respond to of 97611

Russ: 1998 was an atypical year given (a) the early stages of the DEC/Tandem acquisitions and (b) the excessive inventories still being worked off at a cut price. If the PC market is as normal as the other vendors say, CPQ should do better in 2Q. Its 32% margin services division is expected to accelerate in growth. There have been comments that April, so far, is strong as are the order books. There is more cost cutting on the way. The tax credits are still available. Perhaps we should wait for some guidance from Rosen about 2Q and 1999. He must be aware of the danger to the stock price of a prolonged silence and I would expect he would have something to say in 2-3 weeks at the latest. When we get more details, the 1Q results may look at little better, for the following reasons: (1) 4Q used tax credits to get an extra 5 cents. 1Q did not use tax credits. If 5 cents was available in 1Q the 16 cents could have been 21 cents. (2) It is not clear whether the 16 cents included provision for the one-time loss experienced on Brazil income because of the devaluation of the Brazil real. Mason had said in February that it could cost up to 2-3 cents a share. If that is what it cost and if it has been included as an operating cost and deducted from the gross earnings, then we can notionally add it to the 16 cents. So, with 5 cents tax and 3 cents devaluation, the 16 cents figure might have been shown as 23 cents to get a fairer comparison with 4Q. (3) The tax rate was about 18% in 4Q and it was about 34% in 1Q. Had they been even, this would have augmented the 1Q figures.