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

To: Elwood P. Dowd who wrote (60193)	4/30/1999 4:56:00 PM
From: rupert1	Respond to of 97611

In addition to all its other "problems" there is a now weekend fear factor involved with CPQ. The Friday warning, the Sunday sacking of the CEO (and CFO)) followed by a Thursday "sacking" of Senior VP. So, don't expect buying, and expect selling on Friday's until confidence is restored. One way of dealing with fears is to bring them out into the open. What could go wrong now? 1. Guidance from Rosen that WS expectations for 2Q will not be met. 2. Mass exodus of senior executives. 3. A bad CEO appointment. EP explained himself by saying the warning was so late because it was possible that the final days and even the final hours of the quarter might have made it possible to meet expectations. We have heard that there were some very large high-end hardware sales that they were hoping to book in the quarter but failed to do so. The company said that March finished strong and April started strong and that there was a full order book. It appears that the industry is not undergoing any unsual slowdown. Important overseas markets are experiencing faster growth. CPQ is growing sales faster than the average. Growth in profitable services is accelerating. On the basis of this evidence it is hard to see how the 2Q could be disastrous and some grounds for hoping that it will be good. More executives leaving might undermine confidence and characterise CPQ as a "troubled" company. The only ones who would voluntarily leave are those who felt they were going to get the chop anyway. But what we are hearing from the inside is that employee morale is very good and the three-man CEO office has really invigorated everyone. It would make sense that Rosen would wait for the new CEO before sacking anyone else (unless he already had lined up a "star" for any particular position). He should be using the stock market pressure to get everyone working out of their skin. It is hard to believe that the next CEO will be a bad appointment. Not only does Rosen have a good grasp of what is needed to execute strategy, he also comes from Wall Street and knows what is needed to win over the Street. CPQ might not have been able to afford or attract the very best when it hired EP in 1991 when it was just a $3 billion company - now it can afford and attract anyone.