Bill, Pfeif and Mason were spreading the news that this quarter was an isolated incident and that they would bounce back. IMHO, that now looks like a crock. O.K., it always looked like a crock, but now even the bulls can see it was a crock. <g> The industry has big problems so it's not surprising that the biggest player would have big problems. There is only one way to possibly get back on track: cut prices and sell boxes. Compaq has a lot of capital, but not enough to make the likes of IBM or Hewlett-Packard blink. If IBM can lose a billion dollars in PCs last year, they can take any price war Compaq starts. Who can't take it are Dell, Micron and Gateway. Dell because their huge profit margin makes them a high priced seller and they have wasted most of the money they have earned over the years. Gateway and MUEI have all the problems Dell has, except moreso. And they also have E-Machines eating at their larger consumer products base. A price war could take those two down and out. NEC/Packard Bell could be the first to fall, though. Not that NEC couldn't tough out in a price war, but because they may not want to do so.
So, I see Compaq stock down 10% on the announcement. Then, when the inevitable price cuts are announced, death and destruction for all the other players with the exception of IBM, where they are used to losing money in PCs. |
