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

To: rudedog who wrote (78517)	2/19/2000 2:57:00 PM
From: Salah Mohamed	Read Replies (1) \| Respond to of 97611

Rudedog ... About the iPaq >>>a billion dollar run rate - that is 2 million iPaqs. At $500..<<< The iPaq sells between $500 to $800, wouldn't an average range of $600 to $650 more reasonable?. >>>CPQ will have iPaq as 20% of its commercial units.<<< Is the 20% units or revenues?. With ~$12B sales of commercial PC's in FY99, $1.0B sales of iPaq would be about 8% of revenues. BTW, Winkler said in the analyst meeting that the iPaq sales wouldn't cannibalize the PC sales. I have my doubts about his statement, what do you think?. >>>iPaq is a 4% net<<< I take the 4% net to mean operating margin (OpM). This seems to be a very low number for a direct sale, I would think the OpM should be in the 8% to 10% range. About Dell's Problems Dell started to lose market share in the SMB market to CPQ according to this article: ************ 2/18/00 - CRN Reseller Poll:Hardware -- Door Is Open For Compaq To Regain Desktop Edge tscn.com From the article: Survey data from January shows 16 percent of respondents cited Houston-based Compaq as the manufacturer of their best-selling desktop in the small- and midsize-company market. This was the highest percentage among all major vendors, and the highest figure for Compaq in particular since last April. It also was the first time since August that Compaq grabbed the top spot on the best-selling desktop list. "Compaq has taken steps toward leveling the playing field with competitive pricing," said Mike Wintory, president of MicroAge Galesburg, a VAR in Galesburg, Ill. "This has enabled VARs like us working in a smaller tertiary market to compete head on with the computer superstores and mass PC merchants." But Compaq's recent plans to sell more PCs direct to the business market could hinder further upward movement, according to CRN survey data. Two CRN spot surveys show between one-half and two-thirds of responding VARs would shift business away from Compaq if the vendor goes through with its plans. ************ I don't understand this last paragraph. CPQ has 3 channels: Direct for corporate accounts, Direct Plus for VAR's, and indirect through distributors. I would think that going more direct affects only distributors but not VAR's since they can purchase products through the Direct Plus program. Your comments, please.

To: rudedog who wrote (78517)	2/19/2000 3:04:00 PM
From: Ted Foster	Read Replies (1) \| Respond to of 97611

rudedog - A strong point for Dell is the notebook business which offset the decline in desktop revenue in Q4. It was about 28% of revenue and must have been a greater percentage of earnings. One would think that the challenge to Dell would be too obvious for management not to notice although it is not easy to see what they should do differently. It might be best to see if the appliance thing (they are not appliances--they are still computers) gets traction in the market before sabotaging their own ASP's. These "appliances" are not so technologically advanced that Dell couldn't add them to the mix quickly if needed. I take it that you believe that Dell should take the bull by the horns. Now that IBM has announced IPAQ type computers, it seems that there will be enough acceptance that Dell will have to follow suit. But Dell does have part of the answer in the trend to portability where they have been successful in establishing some individuality. The appliances are rank and file "peon" machines, they are not the whole story. What does seem odd is that the challenges facing Dell are not being discussed at all by analysts.