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

To: Kai-Uwe who wrote (8515)	11/4/1997 4:33:00 AM
From: Kai-Uwe	Read Replies (2) \| Respond to of 97611

CPQ: MAINTAINS PRICE PARITY WITH DELL SINCE SEPTEMBER 24 WILL DELL'S SPECTACULAR FINANCIAL RESULTS SLOW? R E S E A R C H N O T E S October 28, 1997 Subject: Compaq Computer (CPQ--$66 --NYSE) AAPL CPQ DELL GATE IBM HWP DEC OPINION ====== Analyst: Don Young Current: BUY Kevin Buttigieg Prior: RISK: HIGH ======================================================================= Ind. Div.: -- Yield: -- Shares: 693 mil. 52-Wk.Range: 79 9/16 - 25 1/4 _______________________________________________________________________ EPS FY Year P/E 1Q 2Q 3Q 4Q Actual 12/95 $ 1.51 43.7X $ 0.32 $ 0.36 $ 0.36 $ 0.47 Actual 12/96 $ 1.89 34.9X $ 0.34 $ 0.39 $ 0.50 $ 0.66 Current 12/97 $ 2.67E 24.7X $ 0.55A $ 0.59A $ 0.71A $ 0.82E Current 12/98 $ 3.20E 20.6X ======================================================================= * Sometime in the last ten days, Dell (DELL - $89, rated HOLD) lowered prices on its Pentium II corporate desktops. * Dell's price cuts (which were not announced by a press release) were relatively small at only around 5%, and preceded Intel (INTC - $81, not rated) price cuts which were announced yesterday. * The Intel price cuts were in line with our expectations - but came earlier than we had expected. Intel has taken action to lower prices of higher performance Pentium II's and high end Pentiums to help improve product mix. * Dell's pricing action comes after Compaq established price parity with Pentium II price cuts on September 29 and Pentium/MMX price cuts on September 24. Compaq had established price parity with Dell in early July with the introduction of BTO, but Dell re-gained its historical 10% - 15% lower pricing one week later. This time, Dell has only achieved pricing parity. * Since late September, Dell and Compaq have essentially been at pricing parity for the first time. * We believe pricing parity is good news for Compaq and will enable the company to gain share while maintaining or increasing financial returns. We worry that Dell's triple-digit ROIC and and 60% unit growth will slow due to increased competition from indirect vendors. ====================================================================== October 14, 1997: Configuration 1 Configuration 2 Configuration 3 Processor 233 MHz Pentium II 200 MHz Pentium - MMX 233 MHz Pentium Memory 32 MB 32 MB 32 MB Hard Drive 3 GB 3 GB 3 GB OS NT Win95 Win95 CD-ROM 12 X None 12X DELL $ 2,043 $ 1,691 $ 1,989 COMPAQ $ 2,076 $ 1,623 $ 1,994 10/27/97: Configuration 1 Configuration 2 Configuration 3 DELL $ 1,993 $ 1,691 $ 1,989 High end microprocessors (233 and 266 MHz Pentium II's and 233 Pentiums) were reduced 18 - 22% sequentially, while low end Pentium prices were unchanged. Intel is essentially offering more of an incentive to users to upgrade to higher performance systems - thereby improving the mix of high end products. INTC Desktop Price cuts: Q2 Q3 Q4 Pentium II 300 MHz $ 1,981 $ 851 $ 738 Pentium II 266 MHz $ 775 $ 667 $ 530 Pentium II 233 MHz $ 636 $ 505 $ 401 Pentium 233 MHz $ 566 $ 367 $ 300 Pentium 200 MHz $ 492 $ 240 $ 240 Pentium 166 MHz $ 270 $ 138 $ 112

To: Kai-Uwe who wrote (8515)	11/4/1997 12:04:00 PM
From: ed	Respond to of 97611

This really means the more AMD sells, the more it will lose. I really do not know how many companies can continue doing this without filing Chapter ? . AMD is really in a suiside mode , and this will accelerate the process !!! The best thing for AMD is to close the fab without selling any CPU, then the balance sheet will look better !!!!!!Otherwise, next quarter's report will look ugly and the loss will be in big time !!!!!!!!