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Technology Stocks : Compaq
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To: Jimbo Cobb who wrote (90879)4/25/2001 12:11:13 AM
From: Night Writer  Read Replies (5) of 97611
 
Jimbo,
If CPQ aggressively prices commercial PCs and low end servers Dell will have to meet or beat their prices. Compaq has high end products and services to make profits. Dell does not have the high end products nor the consumer retail presence. Compaq could crank commercial PCs and low end servers out and sell them at break even prices and still make a corporate profit.

With Compaq reducing their inventory Dell's model has little advantage over Compaq. However, a price war is bad news for both. Dell does have a $4 Billion war chest, but Compaq has high end products and services generating ongoing profits. Dell and Compaq shareholders will see smaller margins and lower profits in the commercial PC area.

Which company do you think will suffer the most? IMHO Dell at $25 is currently a solid short play. It's already on it's way to joining Compaq in the teens.
NW
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