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Stock Analyst Update

Compaq Again Steps in the Right Direction

Turnaround continues as PC maker improves quarterly results.

Compaq Computer (CPQ) is still a turnaround story, but the firm's second-quarter 2000 earnings report showed meaningful progress over prior quarters. Though investors will probably have to wait to reap the rewards from Compaq's improved performance, the stock seems cheap enough to make the wait worthwhile.

Over the past several quarters, its ailing commercial personal-computer segment has been Compaq's main albatross. The unit, which had lost money for four consecutive quarters, swung back to profitability in the second quarter, generating a 2% operating margin.