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Politics : Ask Michael Burke -- Ignore unavailable to you. Want to Upgrade?

To: hpeace who wrote (24747)	11/25/1997 10:59:00 PM
From: Sam Citron	Read Replies (1) \| Respond to of 132070

Good call, Steve. What is your prediction for IBM for the next 7 months? Do you think they can be successful in chips and boxes without causing too many conflicts in the channel? SC

To: hpeace who wrote (24747)	11/26/1997 10:52:00 AM
From: Earlie	Read Replies (4) \| Respond to of 132070

Steve: Re 24747: CPQ and Dell have indeed moved up significantly while I "was talking crash" (I suspect by this you mean my provision of all those generalities noted in my last post). In fact, an investor could have purchased Dell in the high teens 18 months ago, which given a high of $103., suggests a climb of close to 500%. Of course over that same period, Dell's earnings have risen less than half that in percentage terms. Mid last year, Compaq traded at $42., so its rise to a high of $79.50 is close to the referenced 100%, but again, the earnings are up about half that in percentage terms. But of course this is no cause for worry, even as Asia collapses, ASP's of PC's fall more than 50%, and as you yourself pointed out yesterday, major companies are forced to vacate the field (as I have been suggesting would have to occur as a result of too much supply). From my perspective, it suggests "mania", which to me is a cause for concern. Your referenced call for a "selective pullback, ..months before it happened" no doubt included the month in which it would occur, as well as the specific companies that would be affected. If not, in your own words, "where are the specifics", or to again quote your post, "you have to select exactly what happens to be correct". Unlike you, I've don't considered myself to be a "PC expert", nor have I ever suggested as much. To suggest that knowing that the BTO (build-to-order) systems of IBM and HWP include the insertion of the processor as late as possible in the assembly process (as well as other modules for that matter), as opposed to an earlier population of the motherboard as is currently the case at CPQ or to suggest that the degree to which each has implemented direct, automated, electronic parts ordering/managment systems, doesn't suggest expertise to me. I would have thought that a discussion of such BTO issues as the following would be of greater usefulness: - The impact of the provision of JIT services on suppliers..they too have to survive and need time to adapt. - The degree to which the conversion to BTO/JIT procedures and processes is distorting current quarterly reports of both manufacturers and vendors (and not just as a result of inventory reductions) - the cost/benefits to involved players (especially the vendors/suppliers) of implementing electronically implemented ordering processes (one of your own areas of "expertise"). Many simply can't afford to do this quickly given the thin margins. - the degree to which vendors are prepared to "share" (actually assume would be a better word) the cost-of-inventory that until now has been largely borne by the manufacturers. - The degree to which vendors are desirous or prepared to allow a major client to be electronically plugged into their internal production/financial/data bases (nor can one blame them, given the degree to which this has allowed the end manufacturer in other industries such as aerospace, which got into this much earlier than electronics, to off load inventory carry costs to the vendor, audit supplier profitability, dictate more than just product qualities, and to some extent "capture" the supplier). - differentiating product/service.(not easy when everybody's providing BTO/CTO, especially in a commodity environment). - the degree to which the untapped part of the addressed market, i.e., those who have never bought a PC, is prepared to buy a product through the BTO model, when they have relatively limited familiarity with the product, and where the impulse aspect (product on the shelf, immediately available, we're here if you have any problems, etc.), may be important in making the sale. - the impact of the local cloners, who effectively have been providing BTO at the local level for years Personally, I think that the big issues such as massive oversupply, shrinking demand, Asian currency/stock/bond collapse, etc. are far more important than the above noted issue. It relates to seeing forests and trees Earlie