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

To: rudedog who wrote (76699)	1/26/2000 10:54:00 AM
From: csm	Respond to of 97611

Rude, if you carry along with your analysis, what do you think is the possible impact on earnings. As a shareholder I could happily live with slow growth in revenues if earnings were improving. Can you do a "back of the envelope" on NPM and EPS growth? Thanks. Stuart.

To: rudedog who wrote (76699)	1/26/2000 10:58:00 AM
From: JDN	Respond to of 97611

Dear Rudedog: I like your thoughts better then mine so guess I will adopt them. haha. JDN

To: rudedog who wrote (76699)	1/26/2000 11:18:00 AM
From: The Duke of URL©	Read Replies (1) \| Respond to of 97611

Rude: I did not quite follow your numbers, but I think you should add to your equation, the asps for Departmental 4 and 8 way servers. Compaq is using the Ipac as a "loss leader". I am not implying that they will loose money on ipac sales, but it is not the main purpose. The Ipac is the door opener to the departmental servers. The indication of this will be some special ease of connection between the two. This also would imply that Q is about to release the 'iServer'. The strategy is much the same as Apple used to break into Business, ie they had the best graphics. This was about 1985. There was no way IT was going to buy Macs, but the graphics were so compelling, departments bought them on their own. But Apple didn't have a follow on product, they were just happy enough to get in the door. I think Q will, and that will be a sale of a departmental server. So the profit goal is the sale on the turnkey combined systems, I don't know maybe email gizmos, prepackaged firewalls, some special implementation of NT, etc. Grassy Knolls?? :)))

To: rudedog who wrote (76699)	1/26/2000 11:31:00 AM
From: OLDTRADER	Read Replies (1) \| Respond to of 97611

RE:CPQ-DELL will chase them down every path until they are a non event.Don't buy CPQ until it hits 19 again.wbm

To: rudedog who wrote (76699)	1/26/2000 11:36:00 AM
From: rupert1	Read Replies (1) \| Respond to of 97611

rudedog: we have discussed before the possibility that one of iPaq roles is to be a cost-neutral (or slightly profitable) module in large integrated systems, and that the other components of those systems - servers, storage and services would represent an increasing proportion of COMPAQ's profits. Implicit in that is the idea that high unit sales of iPaq's might continue to contribute to COMPAQ's bragging rights as No.1 (eventually to be No.2 after DELL)but eventually the market would appreciate that unit sales are less important than profits and that PC's were merely an adjunct to COMPAQ's other sources of profits. The commercial desktop business represents 30% of CPQ's revenue currently. If that was cut by 30% (say by a fall in average ASP as projected above) it would, in itself, represent a cut of 10% in revenue... That assumes that the number of units remains constant. But you mentioned a few weeks ago that the comparable DELL model is not as attractive in power, features or price. So one of the effects of iPaq could be a signficant gain in market share expressed as units sold. Any such increase in units would increase your revenue expectations, somewhat. The combination of those effects puts CPQ at the 15% to 17% that Capellas is suggesting.... One would assume that even if your main idea is correct, he was still being conservative. More growth might be had (a) from higher iPaq unit sales than you have allowed for (b) continued high levels of consumer PC's sales (c) other new appliances. had to give guidance on earnings... The guidance did not smell right. Therefore, it is reasonable to question why. Your idea is plausible. But I have some reservations about the idea that they would cover it up. Why would they? The only thing DELL or HWP could do about such a plan is to enter into a price war to blunt the iPaq strategy, but iPaq has other competitive features than the price and COMPAQ would win a price war. So if it was covered up for a couple of months lead in marketing initiaitve, can COMPAQ do that? Would not such an explanation of future earnings and corporate strategy be owed to shareholders and analysts? That is not a rhetorical question.

To: rudedog who wrote (76699)	1/26/2000 12:32:00 PM
From: Harry Landsiedel	Respond to of 97611

rudedog. "Any thoughts???? I think you hit the nail on the head. I believe that is one reason why Capellas has said that 1Q would be "slow" and kept the growth rates low going forward. IMHO, CPQ has no intentions of giving up the #1 position in the PC business. The Ipaq could be a marketing coup. It could do for cpq in the corporate world what the iMac did for Apple in the consumer world. (Like most great marketing ideas it will only be obvious in retrospect.) CPQ avoided "spilling the beans" IMHO mainly to not telegraph how important this move is to competition. For one thing, they did not want any other bidders for the INACOM deal. They needed that capability to make iPaq work. Next, they wanted as much of a head start as they could get before being faced by competitive products. (Remember, this idea was pulled together quickly.) If they get a big enough head start, their success could convince others to abandon the market or not compete. Third, the Ipaq is an excellent model to gain share from the white boxes. There is still huge volume potential from that segment. Despite this potential coup Capallas is faced with a dilemma. He needs TIME to pull it off. He doesn't want to crow too much to tip off the competition, but he doesn't want Wall St to give up on CPQ. The solution: a two day investment conference. Trot out all the bells and whistles you can to keep the Street from going south. Remember Casey Stengal's advice on how to be a great Manager, "Keep the half of the team who hates your guts away from the other half who haven't made up their mind." JMHO, but I think you're on to something. It may take the better part of a year to find out for sure. HL PS ...and thanx for all your posts. You have been very helpful to the thread.