Merrill: Intraday note(Winkler, Lewis)
by: skeptically 06/01/01 04:36 pm EDT
Msg: 237539 of 237542
Compaq (CPQ; $15.89; B-2-2-7)
01E $0.45; 02E $0.65
Additional details:
• Mike Winkler, Compaq’s EVP of Global Business Units, the company’s strategy of
providing innovative products, end-to-end solutions, and global delivery of sales and
services.
• There is some sense that the US malaise in IT spending is spreading to Europe. It is
evident in the UK.
• Compaq has targeted several verticals: Telco, financial services, e-business/e-government,
retail, life sciences, health care and phama, media and entertainment,
manufacturing.
• Compaq sees most of these verticals reducing IT expenditures with the Telco area being
the worst performer. Pharmaceuticals doing very well now though.
• Compaq sees its advantage in industry standard servers (wintel servers) coming from the
superior managability of its products (i.e. Load balancing). Compaq’s support services
are also very highly rated.
• Compaq sees IA 64 having a proracted growth period. The McInley chip should be the
first real volume chip w/IA 64.
• Compaq sees IA-64 with Windows 2000 beginning to eviscerate low/mid range Unix
starting in 2003.
• Windows 2000 and XP roll-outs, combined with Y2K refresh cycle should lead to an
upgrade cycle next year.
• Compaq’s Unix products seeing real expansion in the Oracle environment. Compaq’s
competitive edge in Unix is its clustering capability.
• Managing to gross margin percentage at high end and gross margin dollars at the low
end. The operating margin target for enterprise products is 10%-12%.
(S. Fortuna/M. Hillmeyer)
Compaq (CPQ; $15.89; B-2-2-7)
01E $0.45; 02E $0.65
Part III:
• Mark Lewis, Compaq’s VP and GM of the Enterprise Storage Group, indicated that this
newly formed group did about $2 billion in pro-forma revenue in 2000. The group
includes SANs, external direct storage, software and tape. NAS products are part of the
industry standard server group.
• Storage drivers include:
• The information exlosion from the Internet, rich
media, and video. Storage is the fastest growing
segment in IT infrastructure. Incremental storage
spending can't be postponed by companies - least
discretionary part of IT budget. Storage cost
reductions continue to drive new market applications.
• Compaq sees today's storage environment as only
50% efficient. Storage is not always where it is
needed. SANs take it to 75% and Compaq sees the
goal as 95% efficiency with software as the driver of
efficiently using hardware resources.
• By 2003, Compaq sees 75% of IT infrastructure
dollars being spent on storage, up from 25% in 1998
and 50% today.
• Compaq's total storage revenue in 2000 (internal and
external) was around $6 billion. The operating margin
should be at the high end of Compaq's range for its
overall enterprise business of 10-12%.
• Compaq does not see SANs commoditizing anytime
soon. The value is in the sofware (i.e. Managability)
SAN customers see their base hardware acquisition
cost only representing 10% of total life-cycle storage
costs. But, those customers who implemented SANs
felt that with a given levelof resources, they could
manage 3.7 times as much storage than with
distributed, direct-attached storage. This is a cost
savings.
• Compaq wants to make storage a utility service to the
enerprise.
(S. Fortuna/M. Hillmeyer)
Merrill: Intraday note, (Capellas)
by: skeptically 06/01/01 04:36 pm EDT
Msg: 237540 of 237543
Compaq (CPQ; $15.79; B-2-2-7)
01E $0.45; 02E $0.65
Part V
CEO Mike Capellas
1. Compaq is seeing major changes in buying patterns. Standard building blocks are
becoming more important. IT is now often seen as a variable cost. Managability and Services
most important now. Customers will pay for differentiated products but there is little
differentiation at the low end.
2. The middle of the Unix market is now being compresed. This could affect SUN.
3. Pricing:
A) Desktops - competitve and will remain so.
B) Notebooks - more competitive now but Compaq thinks it can keep a premium due to
better technology such as new portables with integrated wireless and better managability.
C) Handhelds - will keep a premium here.
D) Industry standard servers - very aggressive in 1p and 2p servers, now at market pricing;
still commanding a premium in 4-way and 8-way servers.
E) Unix servers - already price competitive.
F) Storage - CPQ already a cost leader here.
4. 64 bit Unix could be eclipsed by 64 bit Intel down the road. Compaq’s clustering
(w/partitioning) experience in its Alpha Unix servers should be an advantage in transitioning
to 64 bit Intel.
5. Low end manufacturing outsourcing transition should be completed by the end of this
year.
(S. Fortuna/M. Hillmeyer) |
