In the first quarter of 1991 Compaq Computer reported a net profit of $971 million, a 24
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In the first quarter of 1991 Compaq Computer reported a net profit of $971 million, a 24 per¬ cent increase above the previous year’s first quarter. Unfortunately, the company’s stock price tumbled by over $9 when the news reached the market. In the third quarter of that same year Chrysler reported an $82 million loss, yet on the day of the announcement the company’s stock price jumped by 15 percent. REQUIRED: Explain why the stock market reacted negatively to Compaq’s news and positively to Chrysler’s news.
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