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Politics : Formerly About Applied Materials
AMAT 297.52-6.6%Feb 4 3:59 PM EST
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To: robbie who wrote (16918)3/3/1998 10:29:00 AM
From: davesd  Read Replies (1) of 70976
 
Robbie, the way I read the tea leaves is that CPQ will see $25 before it sees numbers much higher. So far we have just seen the tip of the iceberg. When a company the size of CPQ starts to show cracks....it gets worse before it gets better...CPQ has just hinted of the problems...I think the full extent will be visible in the next 2 quarters.

Also, it was odd that CPQ did the DEC deal after their stock had fallen from it's highs and moving lower. Maybe CPQ wanted to nail up the deal before negative news started to make it out on the street and drove CPQ's stock further down.

The PC industry has enjoyed a great period in the last few years due to the overcapacity in components in the industry. Starting with DRAM, other misc chips, CPU, Disk drive, etc. That has allowed them to lower the cost of selling a PC, thus driving sales and yet making a good profit.

I think the price decline in the commodity components has slowed significantly therefore, we can expect those types of windfalls to diminish and margins get tighter. The only two companies that were doing ok in the PC market was CPQ and DELL, now it's only DELL. And I'm sure that won't last long....CPQ is know to cut prices to protect market share....that should accelerate and margins will go down the tubes. Plus there can't be much profit in sub $1000 PC's.

My 2c worth.

dave
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