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

To: hlpinout who wrote (94279)	12/14/2001 7:59:59 PM
From: hlpinout	Read Replies (1) \| Respond to of 97611

HP-Compaq Strife Spells Opportunity For White-Box Makers By Jeff O'Heir CRN New York - 3:49 PM EST Fri., Dec. 14, 2001 The confusion and uncertainty surrounding the fate of the merger between Hewlett-Packard and Compaq Computer has created new sales opportunities for white-box builders serving the small-business market. White-box solution providers from various regions of the country are reporting sales increases of between 10 percent and 30 percent for systems and servers in the wake of questions regarding whether the new company,if shareholders approve the merger,will honor old service and warranty contracts and supply parts and components for canceled product lines. Solution providers said their customers are also concerned that if the deal dies, a major vendor partner might die with it, leaving them out in the cold. CAPELLAS SPEAKS OUT Compaq Chairman and CEO Micahel Capellas told the crowd at Internet World he is fully behind his company's merger with Hewlett-Packard. "Small businesses are not apt to pull the trigger on a bunch of Compaq product because of all the uncertainty," said Ross Harris, senior sales manager at WorldNet Computers, a white-box builder in Aliso Viejo, Calif. WorldNet has seen a 25 percent to 30 percent increase in server and system sales since the merger was announced in September, he said. "The merger has created a black hole for those two companies, which can easily be filled with white-box systems and servers," he added. "There's a huge opportunity because many of us are established companies that can guarantee delivery, service and the highest-quality components." WorldNet, for example, recently scored a big win when a customer sought an alternative to a Compaq Xeon quad server and services, a solution valued at about $46,000, Harris said. WorldNet put together an identical white-box server for $12,000 less and pocketed a $12,000 profit. Ray Rueda, president of Honor International, a Miami white-box builder, had a similar success story. Rueda had been selling white-box desktops to a large ISP for years but it would only buy Compaq servers. Last month because of the uncertainty of Compaq's fate, the customer ordered two dual-processor white-box servers from Honor. Rueda sold the solution for 30 percent less than the comparable Compaq server and made twice the profit. HP and Compaq executives said they have not seen white boxes eat into their desktop and server sales. But Rueda and other solution providers said they see more interest in white-box solutions every time the Hewlett and Packard families announce new opposition to the merger. "I hope this uncertainty continues throughout the next round of [Hewlett and Packard family] board meetings," Rueda said.