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

To: JDN who wrote (79467)	3/14/2000 11:03:00 AM
From: Night Writer	Read Replies (2) \| Respond to of 97611

A 1,000,000 buy just ran across my ticker.

To: JDN who wrote (79467)	3/14/2000 1:56:00 PM
From: rudedog	Read Replies (2) \| Respond to of 97611

JDN - re: Personally besides the software aspect, I find it difficult to believe the could possibly devote the resources to Service that EMC does since CPQ is such a multifaceted firm compared to EMC. I haven't followed EMC's service business closely so maybe you could update me, but I thought that of their total of 9,700 employees, about 1200 people were in service. Just as a rough swag, CPQ has 25,000 service professionals, and networking and storage architecture is a big part of their business. That would put EMC at 5% of CPQ's size... Even if only half, or 1/3, or 1/5, or even 1/10 of CPQ's service people do storage, they're still bigger than EMC in that area. But of course there are two ways to look at the comparison, and one view favors CPQ a lot more than the other. First, the "glass half full" view. In raw numbers, the two areas of CPQ which correspond to EMC are the storage division (and now the storage software division) and the two services practices which support storage. The storage group revenue was $6.2B in 1999, and services was $6.6B - both numbers greater than EMC's total revenues of $5.63B from ALL sources. If we count only half of the services revenue as being in the space that EMC plays in, we still see total CPQ revenue in this space of $9.5B, almost twice EMC's total gross revenue of $5.63B. The "Glass half empty" view is that about 90% of CPQ's storage sales are for attachment to CPQ hardware - they are "pulled" by the server sales. So EMC would say that in their space, CPQ only gets to count 1/10 of its storage sales - now it's $5.6B to about $1B, EMC wins. I think the right answer is somewhere in between. If CPQ increased sales of storage attached to other peoples' products by a significant amount, then analysts would buy the "half-full" story, and so would customers. CPQ still has a lot to prove in this market but they are a major player no matter how you slice it.