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Technology Stocks : Compaq
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To: Ibexx who wrote (15811)2/1/1998 11:45:00 PM
From: Harry Landsiedel   of 97611
 
Ibexx. Re: CPQ/DEC merger. I think CPQ wanted a couple of other things.

1) They saw HP's growth and that HP was getting PC business 'cause of their "one-stop" shop positioning. Pfeiffer realized that he was caught between HP and Dell and could not achieve his growth plans without a strategy to handle both. BTO took care of Dell and DEC took care of HP. This leveled the playing field again.

2) As Pfeiffer said, he wanted DEC's worldwide customer base. Then he could grow into the higher profit enterprise business. He did it now because he wanted to hit the ground running BEFORE Merced hits. Also, he believes he can grow the service business. IBM's service arm has grown by double digit rates in this decade to a $19 billion business.

Re: Pfeiffer's shots at Digital. I think this was done on purpose. I don't disagree that it could have been done better in private, but I think Pfeiffer is in a hurry. He doesn't want anybody to think that the DEC ways can be sustained.

Finally, I think Pfeiffer and his team have been working on this for two years. Mason and a couple others are DEC people. They KNOW who the keepers are and what has to be changed. I bet they've have looked at lots of scenarios and financial models and KNOW what MUST happen.

This has been well planned IMHO. Now it has to be executed.

HL
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