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Technology Stocks : Compaq
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To: Key West who wrote (56408)4/9/1999 8:58:00 PM
From: Chuzzlewit  Read Replies (3) of 97611
 
Gene, we call it channel stuffing, but it really isn't. The worst sin you can commit is to run out of inventory. So you put plenty of inventory into the channel, and when there is no sell-through it kills you in the next quarter. That means that you see a big drop from Q4 to Q1. It really hurts companies like CPQ when that also corresponds with a product transition because then you are stuck with obsolete inventory. So Compaq got hit with a double whammy.

Compaq needs to figure out a way to compete with Dell's direct model. And they can't simply copy Dell without taking a huge hit from existing resellers and VARs. Until they come up with a viable strategy they will continue to have problems in generating profits and losing market share.

That's why I invest in Dell

TTFN,
CTC
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