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

To: Rosemary who wrote (9782)	11/28/1997 10:50:00 AM
From: V Lakshman	Read Replies (2) \| Respond to of 97611

The Compaq sub-1000s sure are popular but now, they have some heady competition. Acer throws in a printer for sub-1000, same as Packard Bell. Now, will Santa pay more for quality? Considering that this is a completely new market to whom Compaq has as much brand recognition as Perrier, we'll have to watch and see. lakshman

To: Rosemary who wrote (9782)	11/28/1997 2:41:00 PM
From: hpeace	Respond to of 97611

rosemary, My group had allot to do with the channel inventory system. Although I'm sure that my model has now been improved on drastically. I think it was 1988 that cpq got caught with a bunch of channel inventory in excess of demand. We didn't really have method to know what was out there. We had grown from 0 to over 2 billion 6 yrs. It took Dell 9 yrs. to do that. Dell's feat at 9 yrs is still fantastic.( I'm measuring from when shipments started or dell and cpq). Anyway, the VP of world-wide Materials called me into his office and said " Steve, we have a big problem. Inventory at the dealers has gotten way out of hand and they have too much so we have a slow qtr while they work off the excess. I don't want this happening again and I want systems to come up with methods to monitor channel inventory by store and when a store is over plan levels then I want to know it so i can adjust our prodcution plan. We've worked overtime to prodcue stuff for stores that have too much. He added that I'm sure Daryl White(CFO) and crew are going to want some features that let them plan reserves for price protection and price drops so accurals can make sure that we have no profit surprises on qtr ends" He added that I don't want us to ever get caught like this again and blind sided by inventory in channel. If it's up I want it to be our plan and if it's down I want it to be by design or we cannot keep up with demand. Cpq now has a very sophisticated channel inventory modeling system and his year end increase in dealer retail inventory is by design. They also, have planned price drops that could have been partly charged off to last qtr. I know the $300 drop in the $1799 p233 presario could have been partially charged off to qtr3 for all the inventory on hand. The system can look at the inventory by channel and measure if a particular channel is over or under plan then adjust the prodcution plan. I expect to see other price drops this yr end too but, cpq's profit will still be great. Cpq has moved inventory up but if it was seasonally adjusted it would be down and I mean way down. frankly, I agree with the strategist that was on CNBC today. He said he would be worried if this time of yr cpq didn't have allot of channel inventroy and with the inventory there...you can have sales. W/o pc's at the stores this time of yr. then you lose sales. I don't recco the $799 pc for anyone unless it's because your income can't handle more or it's a second or thrid pc for the household. But, unless meathead ...it's not a 2 yr throw away. He just doesn't have kids i guess. Kids eductional software and internet will run on that baby allot of years. There was a special this week on how many lower income families were doing w/o to buy the low cost pc so their kids would not be left out of the information age job skills... I do recco the $999 open pc that is expandable. When you price out a dell box you don't even come close to $799. Because that pc has the 33.3 modem and the cd-rom. Dell can get to 900+ and that's w/o the cd and the 33.3 modem. add those and it's higher. And, the dell unit didn't have the $1000 worth of home software on it like the presarios have. So, the fact that Dell can compete at that home price is a fairy tale. Dell doesn't want to compete in that market yet. Meathead pulled a Jimbo on me months ago. Priced Dell out and said it was as good as the Business deskpros I had... But, he sneaked in a 1.6 gig drive and it had a 1 yr warranty. The deskpro had a 2.1 gig drive and a 3 yr warranty and was cheaper even with my Dell discount which he didn't count. The issue is people quote cpq Suggest Retail Price..."I've never paid that..it's for suckers". I also, don't pay the std. Dell price..I have volume contracts on both. I'm up now to the Deskpro 4000 p200(knowledge worker) and the Dell P266 (Software and Dsign engrs). The Dell will be moving to p300 soon