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Technology Stocks : Compaq
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To: Jason W. France who wrote (21781)3/14/1998 1:10:00 PM
From: Loki  Read Replies (3) of 97611
 
Jason...The reduction in shareholder value...

If you measure shareholder value as earnings,
the DEC acquisition has diluted this....for now.

In each strategy of a corporation the following is
considered: From a macro and micro view one can
evaluate the life cycle of corporations and also products.

<Macro Corp Phases>
1. Introduction (negative, no, or low profits)
2. Growth (profit incline/corporate structure change)
3. Maturity (profit-"cash cow" phase)(corp can become complacent here)
4. Decline (reduction in profit) (Usually due to "me too" product,
when competitors realize what made you successful, and copy it)

<If a corp. is to survive they repeat cycles>

Corporations that adopt new strategies (new introduction phase)
during the "maturity" phase (using available profits) and simultaneously move out of the old strategy can balance profits
with losses.
To continually recognize new opportunities and adjust your
strategy is the skill. (What does CPQ history show you?)

(Which opportunities to pursue and which not to pursue is equally
important)

THE DEC ACQUISITION...is the strategy to adapt to a changing
market and depart from a market that has reached diminishing
returns at a time CPQ is in the corporate "maturity phase".

The DEC acquisition presents CPQ with the ability to have
a "full package" solution for its customers.
IMO-The integration will not be without tremendous hurdles,
but CPQ has no choice.

Loki
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