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Technology Stocks : Compaq
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To: MeDroogies who wrote (89742)2/18/2001 12:00:47 AM
From: rudedog  Read Replies (2) of 97611
 
MeD- I can not understand what Mikey is up to here. He points out that most of CPQ's profit is in the high end - an area where DELL's low end price war has no effect and where DELL can not go without investment which they have shown they will not make. CPQ will not be hurt by DELL's price war if they don't play. DELL, on the other hand, has 80% of their business in PCs. They plan on maintaining their 18% gross, 5% net model indefinitely. Until what?

At the same time they are scrapping much of their already limited investment in anything but making boxes, they are also backing away from any changes to the "DELL model". So as the PC business goes, so goes DELL - as they increase share, they also inevitably limit themselves to single digit growth in DELL's key north american market. At a 5% net. Can anyone possibly believe that's a recipe for anything but stagnation?

It blows my mind that anyone likes this plan. I don't care how efficient DELL is in their operations, that is just not an interesting business model.
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