Rude: Much obliged for your thoughts on the subject.One thing is for sure there are problems in Houston and nobody at this moment seems to know the extent of it.I am sure we'll find out as time passes.
Here is an interesting excerpt from CNET.
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"The company's sales performance was offset by a number of factors. The first quarter performance for the commercial PC business was below internal expectations. Less than anticipated market demand, increased competitive pricing, and growth below plan all contributed to a revenue shortfall in this business," Compaq said in a statement.
There was a "considerable moderation of commercial PC demand as compared to years past," Rosen said today.
Echoing statements from analysts over the last few days, Compaq said, "It did not achieve the revenue performance needed in higher-end...systems to meet its expected levels of product revenue and gross margin for the quarter."
"We haven't done as much as we could have in putting all of the elements together. It takes a while to get the synergies going," Rosen said in an earlier interview.
Though Compaq has acquired high-end computer makers Tandem and Digital Equipment, over the last few years it has not been able to exploit these acquisitions enough to offset a surge in low-end PC sales, said Bruce Stephen, an analyst with International Data Corporation.
"If you sell more donuts, then expect to sell more caviar...they don't have the right mix yet," he said.
Michael Larson, an executive in charge of consumer sales, said that Compaq "competes profitably with eMachines." Upstart eMachines sells consumer PCs costing as little as $399 and has gained market share in the last two quarters at the expense of major PC companies. Larson also said that the market will continue to see more "subsidized models" (referring to startups such as DirectWeb and Gobi) and "we'll do all of them."
Service sales were solid, totaling $1.6 billion compared to $113 million last year. "The total services business performance met company expectations for the quarter, and the company continues to expect accelerated and profitable growth going forward."
Compaq said it had about $3.6 billion in cash and that it had allocated $215 million for restructuring and $219 million for the acquisition of shopping.com. It also spent $126 million for repurchased of Digital Equipment stock.
The company also cited the following positive developments:
The company's consumer business continued to be robust, with unit growth at more than two times the market.
In commercial PCs, the company maintained its No. 1 worldwide share position, and continued to exceed its plans with its small and medium business direct sales Prosignia products.
The company launched a new class of servers for small and medium businesses, with its NeoServer. Initial acceptance and sales exceeded the company's expectations.
The company's storage business continued to gain momentum, and grew sequentially from the fourth quarter to the first quarter.
In services, the company launched its Next Generation Networks service offering. It also continued to see synergies between its service and product businesses.
The company's Internet business thrived during the quarter, highlighted by reaching a 34-percent marketshare in Web servers.
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