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

To: Windseye who wrote (60330)	5/3/1999 12:24:00 AM
From: E_K_S	Read Replies (4) \| Respond to of 97611

Hi Doug - I reviewed the balance sheet in the CPQ annual report sometime back and noted that there was some very aggressive accounting used in determining the cost of much of the DEC technology. There were adjustments made to their reported purchase cost to reflect an independent valuation (3rd party) ...the difference was adjusted in an accrual account titled "Purchased Technology loss/gain". It appears as management has worked their way through identifying all the DEC and Tandem assets, much (about $2.00/share) has been written down. I wonder if a portion of that <$0.16> loss reflects new adjustments to this accrual account used to discount acquired "Purchased Technology". This should be a balance sheet item adjustment but it is possible that part of this loss may have been carried into the income statement with some creative accounting entries. My point is that it is very hard to compare year to year or even quarter to quarter accounting ratios for the old CPQ company (operations ,revenues and expenses) when management continues to consolidated these acquired "Purchased Technologies" from the current assets and operations. It's a moving target as are all those internal accounting adjustments. I would say that we really need another two or three quarters of consolidation for management to integrate all of the internal accounts. A new CEO will further help highlight CPQ's operations as I expect we will see a management and operation/division restructuring to better reflect CPQ's new future revenue streams. At the current stock price, I believe the market has discounted both assets and operations for the worse case. We really should be pretty close to our lows, unless some new asset re-valuation occurs that has not been previously disclosed. EKS