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Technology Stocks : Compaq -- Ignore unavailable to you. Want to Upgrade?

To: Lynn who wrote (74355)	12/21/1999 9:40:00 PM
From: Captain Jack	Respond to of 97611

Lynn,, if they do not know the difference between MU and MUEI I doubt Dell thinks he needs to pay them... LOL! I think they read my post to El earlier about MUEI/CPQ LOL!

To: Lynn who wrote (74355)	12/22/1999 12:12:00 AM
From: MikeyT	Respond to of 97611

Let me add, CNET has vested interests from Intel...who likes to see Compaq use all "Intel Inside".

To: Lynn who wrote (74355)	12/22/1999 7:23:00 PM
From: Salah Mohamed	Read Replies (1) \| Respond to of 97611

Lynn ... About Cnet Article >>>Conjecture, speculation, referring to an outdated SEC filing? They have been writing for the Yahoo! rumor loving zoo too long. So much for an above board, neutral bias journalistic account.<<< I don't know how you reached this conclusion. The only speculation in the article is the first paragraph. *********** As Compaq prepares for the January launch of the iPaq, there are growing signs the computer maker does not have all the operational assets in place needed to lift the important product line into orbit. yahoo.cnet.com ********* It is clear to me that CPQ can handle the direct sales of the iPaq without any problem since the iPaq is projected to be about 15% of the commercial PC sales during the first year. However, the remainder of the article simply repeats what CPQ and Capellas have been saying since Q3-99 report, basically; - CPQ distribution system is no good and needs fixing. - The indirect model doesn't work. Here is what they said: 1. In Q3-99 report they said that their distribution model sucks. ********* "Customer response to the PC products we launched during the quarter was tremendous and we continue to be the number one PC supplier in the world," said Capellas. "Nonetheless, we have not kept pace with shifts in the PC sales and distribution model. We are moving aggressively to new business models which will lead the next generation of PC innovation and Internet access." www1.compaq.com!ob~17850_1_1,00.html ********* 2. In an interview with Cnet in November 99, Capellas said that indirect model doesn't work in a response to one question and repeated that there are problems with the distribution model in a response to another question. ********* Q: You spoke about direct vs. indirect. How do you plan to solve your distribution problems? A: The market has already decided [about] the traditional two-tier distribution model. The traditional two-tier model where you put inventory into the channel and let people buy inventory out of that channel--that model can no longer work. That's clear now. What that says isn't that the channel itself is a dirty word. It's just that you have to reengineer the process and the channel fits the role of, one, being an extension of your sales force into those markets you can't cover through a cost-effective model; and two, in all areas, they add value-added services downstream. They do things that you cannot do better, whether that's the implementation of complex systems, whether that's burning in specialized software, or whatever that customer needs. Q: What are the areas you would most like to change about Compaq and what are strengths you see that are not well understood? A: If you look at our enterprise business, we had a $600 million operating profit last quarter--pretty solid. We've done a good job defining this is the Business Critical Group--this is the Alpha plus the Himalaya [server] line in terms of these functions. We have industry standard servers and a tight relationship with Microsoft and Novell to go to market. We're growing our storage business. Our customer service is strong. We want to continue to grow our professional services business. So on the enterprise side, the true consultancy side of professional services, that's the hidden jewel but has not yet been developed. In all, the enterprise space is doing a good job getting itself on the right track and really making some inroads. Our consumer business is very solid. We have great relationships with our retail channel, and consumers will continue to buy through retail. But we are starting to develop our e-commerce capabilities. And our share in the industry is quite strong. The thing we really need to work at is remaking our personal computing business. I think that's...clear. It's about simplifying our products, getting our distribution [together], getting better competitive positioning around our direct capabilities, and that's the area where you will now see us put an awful lot of focus. news.cnet.com ********* 3. In the latest 10Q filing (Q3-99), not outdated, they clearly say that they want to go direct but they don't have the distribution infrastructure in place. ********* Factors That May Affect Future Results Transition to direct sales could negatively affect financial results. In recent years, the market for personal computers has shifted from sales through resellers toward direct sales to end users. Compaq sells directly to end users in its enterprise and services businesses and primarily sells through third party resellers in its personal computer business. Direct sales frequently present a more efficient business model for personal computer sales, particularly in the small and medium business market. Compaq has not kept pace with changes in the industry's sales and distribution model and does not currently have in place processes for order entry, production of individualized units and direct distribution that can operate efficiently to manage a large portion of its current personal computer sales. Compaq has established a variety of programs designed to achieve these capabilities by simplifying its product set and pricing model, re-engineering the channel delivery model and more rapidly expanding e-commerce capabilities for large, medium and small businesses. The failure to successfully implement these programs in a timely manner could have a material adverse impact on its business. In addition, if Compaq does not achieve direct capacity quickly, its transition from indirect sales to direct sales could lead to a loss of sales if resellers favor other brands or if the financial condition of resellers erodes as a result of Compaq's transition. edgar-online.com *********** It is very clear from the above that CPQ now realized that the indirect model for commercial PC's is not working and they will go direct when the distribution infrastructure is in place. They have already announced that they are going direct in Europe, North America to follow. Happy Holidays