Hi hio (& Victor),
Thanks for the posts and info. Here is some reciprocity:
COMPAQ: Streamlining Distribution
12:22pm EDT 7-May-99 DLJ Securities (Kevin A. McCarthy)
Earnings Per Share 1999 vs 1998 % Chg
EPS P/E F1QA $.16 vs .01 +1500%
2000E $1.50 16.5 F2Q .20 vs .02 +900%
1999E 1.00 24.7 F3Q .24 vs .07 +243%
1998A .47 52.5 F4Q .40 vs .38 +5%
RATING: Market Perf. Change: None 12-Mo. Target: $30
VIEWPOINT
On Monday, May 10th Compaq will announce a significant change in its
distribution strategy. The company will announce an "US Alliance" which
will authorize only four North American distributors to sell Compaq
products. Ingram, Tech Data, Inacom and Merisel will be named as the
exclusive four distributors. Others, such as MicroAge's Pinacor, privately
held Entex and numerous regional distributors, will be forced to source
product through one of the four companies that make up the new "US
Alliance." All four will expand existing co-location facilities allowing
Compaq to further reduce channel subsidies such as price protection. Co-
location is emerging as a successful formula for improving the
inefficiencies of indirect distribution. Under co-location, there is no
field inventory and distributors can provide configuration services at
place of order and leverage third-party products to drive higher revenue
attach rates. We believe Monday's announcement is a positive for the four
distributors named and for Compaq as well. It is encouraging that Compaq's
interim Office of the Chief Executive will not shy from making material
changes before a permanent CEO is named.
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Intra-Day Special Notes: CPQ
01:31pm EDT 7-May-99 Merrill Lynch (S. Milunovich / K. Campbell)
Compaq (CPQ; $24 11/16; B-3-1-7)
Dec99E $1.20 00E $1.75
o Compaq will be making an announcement Monday regarding changes to its
distribution model. We are hearing they will be pairing down the number of
authorized distributors and/or resellers. At the same time, Compaq has
reauthorized certain Internet retailers to sell Compaq products, which was
previously a sore spot with VARs.
o While we believe both such steps are headed in the right long-term
strategic direction, we believe they could cause more chaos rather than
momentum for business in the current quarter.
o We maintain our Neutral rating on the stock.
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SoundView Highlights
02:01pm EDT 7-May-99 SoundView Financial Group (Tom Cal)
Channel Sector Update
Compaq Computer announced a distribution alliance partnership. The company is
reducing the number of distribution points from 100 to 30. (We believe this
refers to the number of warehouses.) We believe there will be only four
distribution partners (Inacom, Tech Data, Ingram Micro, and Merisel), with
roughly 10 points of distribution. This is an effort to simplify Compaq's
distribution model and reduce overall inventory. This is a positive for the four
distributors chosen.
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