Hi Lynn & victor,
I attach some excerpts from a Montgomery report which centered around the "PartnerDirect" announcement yesterday.
The report was written after the conference call. It mainly rehashes comments and quotes already posted on this board regarding the intent of PartnerDirect to: (a) Provide a more distributor-friendly program, (b) Introduce the SMB-targeted Prosignia line to the retail channel and (c) highlight the new low-end notebook line.
Here are the important points IMO:
"...Most importantly, PartnerDirect is an endorsement of the role of IM ($19 1/2, BUY) and TECD* ($19 1/8, BUY), the leading wholesale distributors. PartnerDirect is something of a reversal from the program announced last November..."
"...PartnerDirect should support continued SMB share gains by Compaq, but we assume for now the incremental sales volumes won't be material to estimates. We think the expanded distribution and product and service offerings announced today should allow Compaq to continue growing its share in SMB..."
"...Maintain BUY on Compaq. Consistent with Compaq's historic seasonal
pattern, we expect CPQ shares to regain lost ground after the first quarter is history and investor focus shifts to the longer-term story. We continue to be encouraged by data points from the supply chain and channel, suggesting CPQ's 1Q results could be better than the market currently anticipates. (EPS above the mid-$0.20 range would likely be viewed as positive by the market; our estimate is $0.33.) Quarter-end buy-ins being offered by Compaq to distributors appear conservative relative to many prior quarters, such that the chances appear minimal that we'll see the revenue and margin dislocations that have in the past accompanied heavy channel stuffing..."
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