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Technology Stocks : Dell Technologies Inc. -- Ignore unavailable to you. Want to Upgrade?

To: Boplicity who wrote (133224)	6/17/1999 1:47:00 PM
From: FiloF	Respond to of 176387

Greg and Thread: IIOnline article re: Compaq. The article points out what we all know -- that Dell ate Compaq for lunch. Although a great testimonial to Dell, I think it shows that pricing pressures loom. iionline.com - "It's Time for Bolder Action at Compaq" Excerpts: "Compaq's current cost structure is not competitive in an environment of ever-falling hardware prices. Its operating expenses are almost twice as much as rival Dell." "Compaq was slow to react to a fundamental shift in the PC business. Nimbler rivals like Dell Computer (NASDAQ: DELL - Quotes, News, Boards), the pioneer of the highly successful direct sales model, have enjoyed a fundamental advantage over Compaq. By selling direct to consumers, the direct model affords the PC manufacturer the advantage of carrying little inventory and a much lower cost structure. Compaq was slow to embrace this sales model for fear of alienating its distributors. As a consequence, its cost structure became extremely high relative to the PC manufacturers that embraced the direct model." "Today's announcement of more aggressive moves is an encouraging sign for Compaq shareholders. But it's also a sign of how far down the PC makers fortunes have fallen. In an environment of sub 25% gross margins and stagnant revenue, Compaq has moved to make its cost structure more competitive. Now, the company must show how it will revitalize the struggling server business inherited from Digital and grow its revenue organically. "While there has been some concern expressed recently about the overall health of the PC market, Gateway (NYSE: GTW - Quotes, News, Boards) recently indicated that results were tracking toward expectations. Thus, it appears that yet again, Compaq troubles are company specific. Nonetheless, Compaq is trying to restructure in the face of an ever-more-competitive personal computer industry."