Tandemonium! - Black Enterprise
Black Enterprise Magazine July/August 2018 Issue

A funny thing happened to Tandem Computers Inc. on its way to a turnaround last year. No sooner had the company begun to regain Wall Street’s favor with a couple of quarters of good earnings, when PC giant Compaq decided to step in and make an offer Tandem shareholders couldn’t refuse — a $3 billion buyout offer proposed in June.

The news set a spark under Tandem shares, which were selling at $13.50 last February. The stock, which had lingered in the low teens most of the year, leapt to the $20 a share range the day the buyout was announced. When the deal closed on August 29, Tandem stockholders received .525 shares of Compaq for each Tandem share they owned. All told, Tandem shares were valued at $34.39, netting investors a 155% gain. That means a $1,000 invested in Tandem a year ago would now be worth about $2,550.

If you bought into Tandem, you might consider holding on to your Compaq shares. Wall Street is currently looking favorably upon the Houston PC maker’s prospects. Of the 36 brokerage analysts covering the stock, 18 rate Compaq a “moderate” or “strong” buy, according to Zacks Investment Research. Wall Street currently projects Compaq to grow earnings nearly 20% annually for the next five years, compared to 7.6% for the S&P 500.

Meanwhile, we asked Pete Seeley (800-777-0289), vice president of investments at Rauscher Pierce Refsnes Inc. in Dallas, who originally clued us into Tandem, for another turnaround recommendation. Seeley says he’s currently keen on Sybase (Nasdaq: SYBS), a database software maker. He says Sybase has a clean balance sheet with no debt and almost $200 million in cash. Another plus is the fact that world-class investor George Soros owns 9% and has added to his position in the last six months. The stock, trading at $14 as of this writing, has languished as Sybase posted losses per share for two years running. Seeley says that’s about to change for the better; the company was expected to post .54 cents a share in 1997, with Wall Street predicting 22% earnings growth for the next five years.
Tandem Computers Inc

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