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

To: Night Writer who wrote (92511)	8/10/2001 7:50:46 AM
From: Dorine Essey	Respond to of 97611

DELL'S PRICE WAR AND IMPROVED SERVICES RESTORE VENDOR TO PRIOR DOMINANCE IN TBR SATISFACTION TRACKING BUSINESS/TECHNOLOGY EDITORS HAMPTON, N.H. --(BUSINESS WIRE)--AUG. 10, 2001--TECHNOLOGY BUSINESS HAMPTON, N.H. --(BUSINESS WIRE)--Aug. 10, 2001--Technology Business Research's (www.tbri.com) just published 2Q01 Corporate IT Buying Behavior and Customer Satisfaction Study: Intel Servers, Desktops and Notebooks shows some spectacular gains made by Dell Computer across all three form factors. This quarter, Dell re-establishes its lead over Compaq in the Intel-based server satisfaction segment, breaks its tie with IBM in mobile computer satisfaction and reasserts a strong lead over its corporate desktop competitors. TBR attributes this rebound to Dell's aggressive price cutting in a marketplace being driven out of necessity by cost issues and Dell's rapid response to customer demand by making targeted improvements to its service and support programs. While TBR's study had revealed gradually declining satisfaction among Dell customers during the past three quarters, Dell has regained a large portion of those losses in one outstanding quarter. -0- T Overview of TBR's 2Q01 Customer Satisfaction Results Change Change Sample 2Q01 1Q01 2Q01 Size Score Rank over 4Q00 over 1Q01 Intel Servers Dell 104 86.83 1 -1.2% +3.7% Compaq 209 84.36 2 +1.0% -1.7% Hewlett-Packard 60 81.67 3 -1.4% +0.6% IBM 75 81.08 3 -1.4% +1.0% Desktops Dell 168 86.96 1 +0.3% +2.8% Compaq 164 83.02 2 +4.4% +0.3% Hewlett-Packard 70 81.41 3 +3.4% -0.8% IBM 81 80.55 3 -1.6% +0.6% Gateway 59 80.15 4 -3.2% +1.1% Notebook Dell 163 83.33 1 +1.0% +2.8% IBM 144 80.14 2 +5.0%-0.3% Compaq 102 78.86 3 +1.5% +1.0% Toshiba 66 77.48 4 -0.2% +1.0% The weighted customer satisfaction scores TBR uses as a means of ranking the systems vendors are based on a calculation where each satisfaction score for each attribute is weighted by the stated importance of each attribute. These are tallied based on a scale of 100 points. Overall satisfaction and customer loyalty ratings are given the highest relative weights. Weights are adjusted each quarter to account for shifts in buying patterns. T The general mood of the 535 IT managers at large U.S. corporations interviewed between April and July 2001 is one largely driven by pricing issues, particularly in the predominantly commoditized corporate desktop marketplace. The overall satisfaction ratings these customers ascribe to their desktop vendors are chiefly influenced by perceived costs of ownership and depth of discounts received. As TBR's comparative vendor strength and weakness analyses confirm, Dell's advantage over the competition is now being determined primarily by the three pricing attributes measured in the study: price/performance, cost of ownership and volume discounting. Among customers that have recently switched to Dell from another vendor, the reasons are now much more strongly influenced by the perception of a better deal. In the Intel-based server satisfaction segment, Compaq and Dell would be tied for the No. 1 ranking position if Compaq's satisfaction ratings for the pricing attributes were equal to those for Dell. While the pricing factor is most influential in the desktop segment, TBR expects to see this dynamic migrate over time into the Intel-based server and notebook segments, where performance, reliability and services currently play a stronger role than on the desktop. As Dell's competitors become more willing to offer more attractive discounts to customers, it will be interesting to see whether Dell's historically loyal audience will be successfully swayed by new temptations. Below are some highlights of the quarter for each vendor TBR covers. Compaq (NYSE: CPQ.N) has lost its advantage over Dell in the Intel-based server rankings from the preceding quarter, essentially due to Dell's corrections in its support services while Compaq's satisfaction ratings for support services have declined. As indicated above, currently Compaq's essential weakness when compared to Dell is a pricing issue. Compaq continues to score well above the competition for its server management software. TBR had pointed to all areas of support, along with scalability/upgradeability and server manageability, as areas where Dell (NASDAQ: DELL.Q) was increasingly exhibiting competitive weakness. This quarter's results show a complete rebound across all these areas, suggesting Dell's targeted improvement programs have elicited a rapid and strongly positive reaction from its customers. Gateway's (NYSE: GTW.N) desktop satisfaction ratings continue to show no sign of improvement. The vendor's comparatively poor performance proves that while price is a principal driver of overall satisfaction on the corporate desktop, when there are issues of reliability and support, price alone is not sufficient to boost a vendor's position in TBR's satisfaction study. Hewlett-Packard (NYSE: HWP.N) had experienced a sharp decline in the Intel-based server satisfaction ratings between 3Q00 and 4Q00. While the vendor's ratings are now stabilized, there is no sign of improvement as the vendor's ratings are compromised by poorer-than-average satisfaction relating to pricing and parts availability. IBM's (NYSE: IBM.N) satisfaction ratings are perhaps the most consistent from quarter to quarter and the vendor continues to fall behind the competition due to issues with the delivery mechanism. While IBM enjoys some strengths in the mobile arena not shared by Dell, including global support availabilityand product design, poor product delivery and availability have compromised the vendor due to their high relative weights. There are signs, however, that IBM is countering Dell's aggressive pricing deals in the notebook sector. Toshiba, along with Compaq, continues to distance itself from the competition in notebook satisfaction, driven by customer issues relating to basic product integrity, services and pricing. The complete study results are contained in TBR's 2Q01 Corporate IT Buying Behavior and Customer Satisfaction Study: Intel-Servers, Desktops and Notebooks. The study represents an installed base of more than 3 million systems and a purchase intent of around 850,000 systems. For vendors, distributors, large end users and the investment community, this program has become the preeminent tactical tool for monitoring customer satisfaction from quarter to quarter. A customer satisfaction research program subscription consisting of four quarterly reports is available for $5,000 annually to interested parties through the contacts listed below. TBR publishes separate quarterly customer satisfaction studies on service and support and on RISC-based servers. For more information on the study, please contact: Julie Perron, Manager of Primary Research Technology Business Research Inc. Phone: 603-929-1166; Fax: 603-926-9801 e-Mail: perron@tbri.com

To: Night Writer who wrote (92511)	8/10/2001 9:43:12 AM
From: Elwood P. Dowd	Respond to of 97611

Merrill on Compaq Global Services Day by: skeptically 08/10/01 08:47 am Msg: 248373 of 248377 10 August 2001 Steven M. Fortuna First Vice President Michael Hillmeyer Industry Analyst Compaq Computer Corp Highlights from Compaq Global Services Day • Yesterday (9 Aug.), Compaq held its first Global< • Compaq Global Services currently has 38,000 employees, of which 10,000 are contract workers. This gives Compaq a great deal of flexibility during lean times. In the recently reported June quarter (2Q01), Compaq Global Services revenue came in at $1.94 billion (23% sales), up 6.8% yr/yr (up 13% yr/yr in constant currency) and up 0.4% sequentially. Compaq’s goal is to grow its services business to around 33% of total revenue with both the Enterprise and Access segments each contributing similar amounts. The company’s target growth rate for services as a whole is 10%-12%. The target growth rate for professional services is 15% while that for customer service is high single digits. • Within Global Services, customer service revenue was up 2% yr/yr (7% in constant currency) in the June quarter while the higher margin professional services segment saw revenue rise 7% yr/yr (15% in constant currency). Support Services makes up 56% of the services mix while Systems Integration is 25%, Outsourcing is another 10% and the remaining 9% is Compaq Financial Services. • We are maintaining our Accumulate (B-2-2-7) rating on Compaq shares. a couple of excerpts: >Compaq believes that it is differentiated from its competition by providing the most extensive multi-vendor, multi-technology services (i.e., it will support competitive environments), global reach (around 200 countries), and defined practice areas, both vertical (such as financial services and telecom services) and horizontal (i.e., outsourcing and systems integration). In addition, Compaq Financial Services can provide customized, global financing from a single source. revenue.< >• Compaq gets better service opportunities when it deals directly with the end user rather than by selling through the channel. Its attach rate for services varies widely by product type. For high end Himalaya systems, clustered Alpha servers and direct Alpha sales it is virtually 100%. For the direct sales of Proliant servers (Intel processors) it is around 50%. Attach rates for indirectly sold Alpha and Proliant servers are less than for direct sales. The overall attach rate for services in North America is around 12%, and Compaq’s goal is 20%-25%. Compaq estimates that a 1% increase in attach rates leads to $100 million in incremental revenue.< >•Compaq invited two important customers to speak at the meeting. Interestingly, one of these, the CIO of SBC Communications, indicated that he is sticking to a 36 month replacement cycle for desktops. SBC is doing this both in order to keep the total cost of ownership down and to avoid the need to replace a large number of systems in any one period in the future by skewing the replacement cycle now. This has been one of our more important arguments in predicting that worldwide PC unit demand next year is likely to be quite healthy. Our current forecast calls for worldwide units to be up 17.5% in 2002 after falling 5.0% this year.