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

To: kemble s. matter who wrote (155775)	3/31/2000 9:43:00 AM
From: rudedog	Read Replies (2) \| Respond to of 176387

Kemble - re: The news is not good for Compaq, which had been able to point to its consumer PC division as a bright spot I completely disagree with the particular press view quoted on this, for 2 reasons. 1) CPQ has stated that they intend to make their PC business profitable, even if that costs them market share. As a CPQ shareholder I applaud that move. If it were not for CPQ's money-losing commercial PC operations, they would have had great numbers in 1999 instead of the lackluster performance they showed. CPQ's profits are in high end enterprise sales, where they have the same kind of advantage over IBM, SUNW and HP that DELL has over CPQ in the PC space. The money-losing PC battle with DELL was a holdover from the Eckhard Pfeiffer days, and given the difference in efficiency of the distribution, and the many other advantages that DELL enjoys, that seemed like a weak proposition. The sales figures quoted are PC sales at retail, not "consumer" sales per se. In the consumer business, CPQ still outsells the next two competitors combined. But even there, CPQ's consumer sales represent only 15% of revenues and only about 1% of profits - hardly what I would call the "bright spot". 2) More importantly, the analyst (if he can call himself that) also failed to notice that CPQ has a stated goal to move 40% of their sales to the direct model by the end of the year - that will surely reduce their sales at retail, since their overall revenue growth is only targeted at 10%. so regarding "Guess Cappellas hasn't stopped the bleeding... I would suggest that this is evidence that CPQ is moving on its plan to shift revenue away from PCs and into enterprise. We will know more in a few weeks when they announce earnings. But you are falling into the same trap as many in the press - looking at shifts in CPQ's PC business without understanding the overall business strategy will lead to the wrong conclusions about what CPQ is trying to do, and whether they are succeeding.