Compaq Message Board - Msg: 4952503

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Technology Stocks : Compaq

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To: Dr. David Gleitman who wrote (27920)	6/21/1998 12:47:00 PM
From: Bill Fischofer	Read Replies (5) of 97611

CPQ Y2K Play CPQ has been playing a patient game for the past year but that's about to start paying off bigtime. Here's why. We are approaching a very critical time in the Y2K opportunity for the simple reason that 18 months is a magic number for major systems integration projects. I've believed for some time that most companies will hem and haw over their legacy systems and in the end reach for their checkbooks and just go the wholesale replacement route. CPQ is now ideally positioned to extract maximum benefit from this phenomenon in the final 18 months leading up to January 1, 2000. The en masse migration of corporate systems to Windows NT, the need for laggards to get with the e-commerce program, and with the implacable Y2K deadline serving as accelerant to light fires under management means several things: 1. Demand for NT migration and integration skills is poised to skyrocket. CPQ now has the broadest and deepest pool of NT talent on the planet (including MSFT). This is as close to a license to print money as you'll find over the next year. 2. Tandem and DEC brought CPQ precisely the technology and skillset to tackle enterprise-level scalability and reliability in an NT context. The Merced delay has opened a golden window of opportunity for Alpha and INTC's ongoing spat with DoJ will mean that CPQ will have excellent leverage in getting the best pricing on Xeon and other interim pre-Merced technology from INTC. 3. The increasing urgency of the Y2K deadline means that companies will gladly pay a premium for one stop shopping to get them over this hurdle. This is now CPQ's key strength. 4. In the meantime the launch of Windows 98 this week will, contrary to the expectations of most pundits, release a tidal wave of pent-up consumer demand for these systems which will benefit the entire PC sector. This will clearout any residual inventory problems in short order and complete the CPQ transition to ODM and channel assembly. The net of this is that CPQ's downside from here is negligible (one last visit to the 25-26 range is possible, but that's it) while the upside is steep indeed. I expect CPQ to hit 100 over the next 18 months due to this confluence of forces.

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