George, I read his comments several times, and I'm not sure. I would have guess that the major inventory problems would be in the weakest area of sales, and Pfeiffer said that that was commercial sales in North America, so if you forced me to predict where those price cuts will be I'd have to say commercial, and largely servers.
Now, this raises a very interesting issue. Because of the magnitude of the inventory build-up, Pfeiffer estimates that it will take more than one quarter to clear. But, prices of components have been falling, so it is entirely possible that Compaq can sell computers at the same price as Dell and lose money (because of their higher costs), while Dell makes money.
The other interesting point in the conference call is that Pfeiffer blames slowing demand for the inventory problem, while other manufacturers see healthy sales. But I must ask how, if Compaq was implementing a JIT type system, their inventory got so far out of balance?
Regards,
Paul |
