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

To: Tmanquinn who wrote (10259)	12/5/1997 2:23:00 PM
From: hpeace	Read Replies (1) \| Respond to of 97611

vince, conclusions are okay... what I wanted was which news items did you read.. it's the news Items that I want to read. can you point me too them???? I've been through 31 cpq stock crashes.. it's allittle hard to spook me.<gggg>

To: Tmanquinn who wrote (10259)	12/5/1997 4:19:00 PM
From: hpeace	Read Replies (1) \| Respond to of 97611

Thread, November 24, 1997, Issue: 192 Section: News Recent Deep Price Cuts, Aggressive Presario Line-Up Send Veteran Scrambling -- Compaq May Ring Packard Bell in Q4 By Roger C. Lanctot Las Vegas-Compaq's recent deep price cuts and an aggressive December Presario rollout have put veteran Packard Bell NEC in an unusually defensive position as the holiday shopping bell sounds. Compaq's price cuts of up to $500 on its desktop and notebook computers in the retail market put pressure on all PC players on the eve of the final important pre-holiday sales period, a time during which Compaq has already solidified its conquest of the retail desktop market, according to audited retail sales data from Computer Intelligence, La Jolla, Calif.; Intelect ASW Marketing Services, Port Washington, N.Y.; and PC Data, Reston, Va. Compaq also plans a new, more aggressively priced product line based in part on processors from Advanced Micro Devices. That product is expected to begin shipping before Christmas, putting even more pressure on all competitors-especially No. 2 retail PC supplier Packard Bell. As a result, retailers and competitors said, Packard Bell is assembling a schedule of price cuts that will be announced in late November. The cuts could accompany new products prior to Christmas. "They're still crunching the numbers," said a merchandise manager who asked not to be named. "Their new product line would ship prior to Christmas but may not make it to stores by Christmas." Mal Ransom, Packard Bell's senior vice president of marketing, agreed that any adjustments to be put into effect before Christmas would have to be determined "soon," although he would not commit to a time. "You're not just talking about a price cut," said Ransom. "You're talking about a transition." Also of note:Packard Bell has a tradition of closing down its factories for two weeks in December. Meanwhile, Packard Bell NEC held its "regular meetings with [our] accounts" at Comdex, said Ransom. "They either have or will have everything they need [to prepare for the holidays]. We will or have responded to the requirements of the retailer." Retailers said Packard Bell must fire back strongly. "They need to be at $999 with an Intel 233MHz (MMX) and at $1,499 with a Pentium II," said a buyer. "They're not necessarily losing market share. But they're ticking off retailers [because] we need volume SKUs and they are not providing them. We need products offered at price points that bring people into the store." Compaq's successes at retail in 1997 coincide with Packard Bell's decline, which is tied to a year-and-a-half-old strategy of walking away from "unprofitable" business and responding to customer support, product return and sell-through issues. Ransom said the company has reduced the number of weeks of inventory in the field by 60 percent from 1996 levels while tripling product turns to 20 per quarter and reducing inventory to pre-1995 levels. "There are no overstocks or understocks of Packard Bell merchandise in 1997," Ransom said. "We are working closely with retailers to manage their inventory." The low level of inventory in the field should facilitate a price move by Packard Bell, since it would limit any price-protection exposure and ease the launch of product offerings. Paying price protection to retailers is especially challenging for Packard Bell, which has hemorrhaged cash since its merger with NEC. Ransom declined to comment on the current or future status of the financial relationship between Packard Bell and NEC. Observers have long anticipated a takeover of the entire operation by NEC, which has yet to take place. The company's share of retail unit and dollar sales, shelf space and advertising activity have all declined substantially since the beginning of the year. Ransom declined to comment on whether Packard Bell had recently shipped any new product to two of its larger accounts, Office Depot and Computer City SuperCenters, both of which appear to have curtailed purchases of Packard Bell products. Neither retailer would comment except to say they had not terminated their relationships with Packard Bell NEC. To top off the challenges facing Packard Bell, retailers and competitors were abuzz at Comdex last week with word of chief executive Beny Alagem's ongoing recovery from what most have concluded, or been privately told, was a heart attack suffered in October. The change in Alagem's hands-on style of running Packard Bell and dealing with accounts personally was demonstrated by his absence at Comdex, but Ransom said Alagem was not the only one making decisions, and pointed to roles played by Brent Cohen, president of the consumer division, and Louis Machuca, executive vice president in charge of the commercial division. Besides, said Ransom of Alagem's condition, "Beny's fine."