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Technology Stocks : Compaq
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To: rudedog who wrote (69698)10/23/1999 8:40:00 PM
From: E_K_S  Read Replies (1) of 97611
 
Hi Rudedog: If indeed IBM's Y2K problems rollover into some of the other "enterprise service" sectors, what impact might this have on CPQ?

I doubt that there would be any significant slow down in CPQ's storage division. Perhaps their service arm might see some push backs for intallations of new Alpha machines and maybe some high end servers (that tie into IBM mainframes). IMO, all this is minor compared to the downsizing and cost cutting CPQ is currently implementing. CPQ's gains this quarter will be in cost reductions, not reduced sales due to IBM's Y2K problems.

The impact to CPQ IMO will be in the next two quarters as "enterprise revenue" growth may be slower than expected due to potential delays in orders due to IBM Y2K mainframe order push outs.

However, I believe we already discounted this "potential" growth in enterprise revenues and CPQ's next two quarter gains are easly obtained from cost reductions alone and department consolidations.

In fact, this may be an opportunity for CPQ. Once they finish their restructuring and assign new enterprise "sales" staff to key accounts, they can push new server products next quarter just when their fortune 500 customers will be ready to place new orders (ie after Y2K).

CPQ will have a small window of opportunity here to focus their service/sales force to lockin some very profitable orders with long term service agreements. In fact Q2 next year may show some stellar results.

What's your take?

EKS
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