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Technology Stocks : Compaq
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To: Jack T. Pearson who wrote (26535)5/24/1998 1:31:00 PM
From: Harry Landsiedel  Read Replies (3) of 97611
 
Jack T. Pearson. Re: "So how much of a loss do you think Compaq will be willing to incur to gain market share. It looks to me like Compaq may have to "blink" first on cutting costs and giving up share."

For your scenario to happen requires that the future to be the same as the past. I don't think that will be the case. After Cpq flushes out old inventory and shifts to BTO successfully, the playing field will be level. My point is will cpq be content to slowly build share at that point or go for broke and take advantage of their better cost structure vis a vis IBM and HP and force them to match prices and lose more money.

When CPQ announced that they will reduce Digital's overhead from 24% to 12% (to match Cpq's) that was a clue to me that they will be aggressive. Re: IBM and HP, look at their revenue/profit per employee. Compared to cpq, it ain't good.

HL
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