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


To: hlpinout who wrote (94427)12/22/2001 6:29:08 AM
From: hlpinout  Respond to of 97611
 
Excerpt from Barron's.
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DECEMBER 24, 2001



Forget the Market
Portfolio manager ignores the broader averages, focuses on company fundamentals
An Interview With Ted Kellogg ~ In this year of living dangerously, the $67 million Boston Partners' Long/Short Equity Fund that Kellogg guides has provided investors with a degree of comfort and security that is exactly what they expect to achieve when they turn to such a vehicle


"Q: What do you think of tech stocks here?
A: The strong balance sheets are going to try and get rid of the weak balance sheets. The most recognizable example of this is Dell. Dell is going to spend the next three to four years making life as miserable as it possibly can for Gateway, Compaq Computer and Hewlett-Packard. That's why the Compaq-Hewlett-Packard deal is a really terrible idea. The last thing they should want is to buy Compaq. The first thing they should do is get rid of the PC business because they are not competitive with Dell. That's the reality.

Q: Ah, but Compaq is telling us they're a server company now.
A: Okay, now they are competing with Sun Microsystems, IBM and Hitachi. There are companies out there with really solid balance sheets that can underprice them, period. And they will. End of story. It's also important to remember that when tech companies talk about increasing order rates, those orders are often buying top-line growth and no bottom line, particularly if the company is operating at less than 50% of capacity utilization and its competitors are, too. Name the product: telecom equipment, PCs, cell phones, semiconductors or whatever, and you'll see there are huge price pressures. To get capacity utilization up, companies will buy business. So order rates may go up, but earnings won't.


Q: Because they're giving stuff away, essentially.
A: They have to. Otherwise they'd go out of business. There is no choice here. Unless they have something unique, they have a problem with profitability. It's margins I'm worried about, not the top line. The top line will show growth because technology is a growing part of the economy. The problem is, companies won't earn anything. At this point, I think inventories are in relatively good shape, but there is still too much capacity. Until capacity is used up, no one is going to make any money."



To: hlpinout who wrote (94427)12/22/2001 6:32:54 AM
From: hlpinout  Respond to of 97611
 
December 22, 2001 03:10

European Regulators Begin 30-Day Review for HP-Compaq Deal
By Tom Fowler, Houston Chronicle
Dec. 22--Hewlett-Packard and Compaq Computer Corp. have formally notified European Union regulators of their merger plans, starting the clock on a 30-day review period.

The request for antitrust clearance, received by EU officials late Thursday, followed extensive preliminary talks with officials in Brussels, Belgium, to identify potential problem areas before starting the clock.

The EU filing is seen as further commitment on the part of the two companies to push toward an HP shareholder vote, despite strong opposition from some of the largest institutional shareholders.

"Both companies remain totally committed to the successful conclusion of the deal and believe that the business rationale for the merger is as compelling as ever," the companies said in a statement.

A shareholder vote is expected early next year.

The deadline for the initial review is Jan. 31, EU spokeswoman Amelia Torres said.

Unlike in the United States, a strict timetable is triggered once the EU is formally notified of a planned takeover. If problems are not resolved in the first phase, which lasts one month, an in-depth review, which takes four months, is automatically launched.

Legal experts say talks with regulators most likely focused on the size of the merged company's personal computer and server businesses in Europe. If it was determined to be too large, EU officials could ask the companies to divest themselves of some of their businesses in those areas.

A merged HP and Compaq would have about $87 billion in global sales, of which about a third would be in Europe.

The companies filed their plans with U.S. antitrust officials soon after announcing their plans in September. In late October, the Federal Trade Commission made a second request asking for more information in their review, a move that is typical in such large acquisitions.

HP and Compaq officials have been providing information to fulfill the commission's request since early November, but a spokesman says the companies have not yet reached the point where they believe all the FTC's questions have been answered. Once the companies finalize their information with the Federal Trade Commission, the agency has 20 days to reach a decision.

The U.S. and European antitrust review systems aim to encourage open, competitive industries but approach it differently, said Robert Lawless, a law professor at the University of Missouri-Columbia.

U.S. antitrust reviews focus on how the merger will affect consumers; in Europe the focus is on how it will affect other companies in the industry.

"European regulators will ask if a merger drives out smaller competitors. If the answer is yes, they may have some concern," Lawless said. "In the U.S., the view tends to be those competitors that are driven out of business are probably inefficient and should not be in operation anyway. If the merger will drive up costs for consumers, then there are concerns."

The failed merger of General Electric and Honeywell earlier this year highlighted the different philosophies between the United States and Europe. U.S. regulators passed the deal with relatively little friction, while in Europe the deal was killed because of concerns that smaller competitors in aircraft and avionics would be threatened.

"There's a certain strain in Europe that says big is bad for its own sake, while in the U.S. big is bad only if it affects the end customer in a negative way," Lawless said.

It's unlikely either review will be a problem for the HP-Compaq merger, most observers say.

HP and Compaq would have more than 70 percent of the U.S. retail market for desktop and notebook computers, but competition isn't likely to disappear because the barriers to new competitors getting into the computer hardware business are relatively low, said Norman Hawker, an associate professor and research associate with the American Antitrust Institute.

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To: hlpinout who wrote (94427)12/22/2001 6:34:42 AM
From: hlpinout  Respond to of 97611
 
December 22, 2001 03:10

Houston Chronicle Computing Column
By Dwight Silverman, Houston Chronicle
Dec. 22--You don't have to look any farther than the computers included in this review to see the stark differences between consumer and business PCs these days.

Businesses want their computers as simple and plain-vanilla as possible, while consumers increasingly are embracing the idea of convergence -- the marriage of the PC with other household entertainment and communication appliances.

What follows is a look at one computer that's as basic as you can get -- but still looks pretty slick -- and another that aspires to replace your home stereo system.

EVO D500 CMT -- $989, Compaq Computer Corp.: The new Evo line replaces two PC families on Compaq's business side -- the venerable Deskpro brand, aimed at corporations, and the Prosignia, which had two markets: small business and PC "enthusiasts."

The Evo line will likely appeal to the large, medium and small business groups, but it only hints at the potential for enthusiasts. Compaq's Web site offers only mediocre graphics cards, for example, and you can't get a DVD or CD-RW drive if you want it shipped with Windows XP.

Of course, that's not going to stop a serious PC hobbyist, who'll add his or her own muscular graphics card and aftermarket DVD or CD-burner drives.

It's a pretty impressive and powerful bargain. The model I tried came with a 1.5-gigahertz Pentium 4 chip (it's now available at the same price with a 1.7-GHz processor), 128 megabytes of memory, a 20-gigabyte hard drive, a CD-ROM drive, a 16-megabyte nVidia Vanta graphics card, 16-bit sound and 10/100 Ethernet adapter.

This comes in a jet-black case with a brushed silver front. Along with looking pretty cool, the case opens up easily and is very easy to work in. Also, the drives in front can be rotated 90 degrees so the minitower configuration can be converted to a desktop model.

The Evo's costs are kept low by use of standard SDRAM with the Pentium 4 chip, rather than the more expensive RDRAM often associated with that processor. The downside is that the Evo is not going to be the fastest P4 system you can buy, but for most everyday business uses, it's just fine.


VAIO MX -- $2,799, Sony Corp.: Sony's been doing some extremely innovative things with PCs lately, and this one continues that tradition. It plays to Sony's strength as a manufacturer of home entertainment electronics.

It's a stereo system, TV, DVD burner, FM radio, as well as a powerful computer. It can accept data from and save it to a variety of formats -- CD-RW, DVD-RAM, MiniDisc and Memory Stick. It has every kind of port you'd want -- Ethernet, USB, IEEE 1394, serial and parallel.

It came with a 1.7-GHz Pentium 4 chip, 512 MB of memory, an 80-GB hard drive and the DVD-RAM drive, which can also read and write to CD-R and CD-RW discs. It uses nVidia's 32-MB GeForce 2 MX/200 video card for fast graphics, so it's also a decent gamer's machine.

But where it really shines is in its sound. From the easy-to-use software to the high-quality, two-way speakers, Sony is aiming this squarely at music fans. The only thing I wish it included was a subwoofer -- the bass is a little weak. But that's only a mild complaint, given overall how sweet it sounds.

Sony also made the case look cool, so you won't be embarrassed to set it up in your living room. The front of the computer is a mirrored silver, and when it turns on, a hidden LCD window appears on the front that lets you know what mode the PC is in. For example, if you turn on the stereo FM tuner, that information is displayed out front. When you turn the PC off, the display is gone, replaced by that shiny silver finish.

It also functions as a personal video recorder, allowing you to digitally record favorite TV shows, including pausing them while they continue to be stored on the computer's hard drive, then resume them.

However, as you can tell, all these features don't come cheap. In addition, I tried this with Sony's 15-inch, PCVD-15XD3 VAIO digital flat-panel monitor, which adds $600. Total price would be over $3,300, which is astronomical in the age of commoditized PCs.

But Sony is hoping you'll think of this as more than just a computer -- one on which you can burn your own music CDs from tunes grabbed off the radio while monitoring CNN on cable.

--Send e-mail to dwight.silvermanchron.com. Silverman's Web site is at www.dwightsilverman.com.

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To: hlpinout who wrote (94427)12/22/2001 6:46:56 AM
From: hlpinout  Read Replies (1) | Respond to of 97611
 
I don't know why there is such a discrepancy between the filed date and the date listed at the start of the article.
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Compaq Plans Increased Investment in Emerging Markets

--------------------------------------------------------------------------------

Story Filed: Friday, December 21, 2001 3:20 PM EST

Lagos, Dec 03, 2001 (Financial Standard/All Africa Global Media via COMTEX) -- Olivier Suinat, general manager for Compaq Corporation in Africa has said that the company plans to increase the regional and local investment in the emerging markets around the world, especially in Nigeria where the market is largely untapped. He said Compaq came to this realization as a result of the current realities in the information technology markets in the developed economies. This he said has led to the recognition of the need for IT penetration in the emerging markets.

He said due to overcapacity, which has resulted in three years of hyper growth and venture capital, as well as increasing commoditisation, brutal pricing, reduced overall investment in innovation and shifting demand in developed countries, "we decided to bring products and service support close to customers and focus on control of grey market in emerging markets."

According to him, there has been a drastic down-ward trend in the global IT spending between 1996 and now, and this, he said, is expected to continue till year 2005. In 1996, the annual growth rate in the IT spending accounts for 10.9 per cent. The spending peaked in 2000 with 12.6 per cent and dropped sharply last year to 8.6 per cent. It is not expected to exceed 10.6 per cent in 2005, he said.

He said the recently announced merger between Compaq and Hewlett Packard (HP) is to ensure a new generation of IT partnership with broad range of solutions using the best technology in the industry. He said if the merger finally sailed through, it will bring to the Nigerian market, deep understanding of customer complexity, engineering excellence and innovation, best products across key growth markets, enhanced service delivery and broad customer coverage and support.

"For customers, Compaq/HP will bring continuity in relationship and for distributors, we would have to make hard decision as we will not keep those who are not sustainable. We will take the best distributors among the two companies and disperse others" he said. He however assured Nigerian customers of competitive pricing on all its products. Most organisations in the country complain of high prices on Compaq's products despite its physical presence in the country. It was even found out that prices in other nations that fall within the Middle East are lower than the local prices.

Suinat urged its customers in Nigeria to always come forward if they discover such disparity in the prices and "we will surely get back to you".

He said prices are much lower in most parts of developed countries because of overcapacity. "The prices are higher here because the market situation is different and we will need to keep investing."

Chuks Okpaka, presales specialist, Compaq Nigeria observed that there are three principal factors that drive IT business growth in Nigeria. These are pressure to reduce the cost of running the business, need to become increasingly competitive and the need to better understand the business data and information. He said most customers in Nigeria acquire hardware because they think others are acquiring it. He said this should not be so as different organisations have their own peculiar requirements to be able to make meaningful impact on their business performance. He said there are five basic reasons why organisations in Nigeria should evaluate Compaq's solution. These include best performance, scalability, reliability and availability, lowest total cost of ownership and flexibility.

Chioma Iwuchukwu, regional marketing manager/ABG sales specialist for West Africa also took the occasion of the cocktail organised for its customers, recently in Lagos to re-introduce the new evo products of the company. She said the product came about because of the organisation's view of the future. "Customer expectations will be shaped by innovation in personal computing, convergence of home and business uses and wireless connectivity," she said.

by Abimbola Tooki

Copyright Financial Standard. Distributed by All Africa Global Media(AllAfrica.com)

KEYWORD: Nigeria