Tech Sector Treads Cautiously on Compaq Shakeup

SAN FRANCISCO -- Investors are reacting cautiously to news of Compaq's (CPQ) management shakeup.

In early trading, Compaq was up 13/16, or 3.4%, at 24 7/16. While the changes may be prompting some fresh buying in the stock, traders getting out of recently placed short positions may also help the stock today. Other boxmakers were mixed, as

Dell

(DELL) - Get Report

was up 1/2, or 1.3%, at 38 3/4, but

Gateway

(GTW)

was down 1/8, or 0.2%, at 64 1/16.

Market analysts are split by what the Compaq move means. In a report today,

Bear Stearns

indicated that the officers' removal shows that the problems "are Compaq-specific and that industry demand is fine."

PaineWebber

analysts wrote that the management change will not "resolve the fundamental problems hurting Compaq today (weak demand). However, it may lead to better execution and a more aggressive push into the Direct channel." While maintaining a neutral rating, PaineWebber said the changes should be well received by investors and the stock is attractive based on many value measures.

SG Cowen

was even more cautious, saying it expects rapid cost/expense restructuring. "While a change in leadership may be a necessary first step, it is far from clear to us that a new team can quickly right the ship," analyst Richard Chu wrote.

Online brokerage stocks were taking more hits this morning. The stocks have suffered from heavy profit-taking in the past few sessions and are reeling after reports that the

Securities and Exchange Commission

said it was investigating service complaints by customers of online brokerages.

Early on,

Ameritrade

(AMTD) - Get Report

was down 18, or 14.3%, at 108.

E*Trade

(EGRP)

was off 10 15/16, or 11.8%, at 81 5/8.