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

To: Obewon who wrote (14764)	1/24/1998 6:44:00 AM
From: Spots	Respond to of 97611

Well, even in your scenario it depends on the portion of component parts in the bottom line. Looks to me like you've taken it as all component parts, but the number's considerably smaller. However, if I were CPQ's marketing executives I'd be using my component savings and my economies of scale to drop my prices and put the momma of squeezes on the competition. I'd pay some attention to the high end, but mostly I'd try to reach the magic consumer $499 number with decent margins. That would explode the low end with a whole new class of purchasers, many of whom will eventually move up, with one CPQ box in the house already. Bottom line increase would come a distant second to market share in my plan book. BWDIK? Regards

To: Obewon who wrote (14764)	1/24/1998 9:13:00 AM
From: Mohan Marette	Respond to of 97611

OB: As the man (Mason) said CPQ didn't benefit all that much from cheaper componet prices in 97,but as the contract expries and new contracts are signed,we should start seeing the benefits in 98 and I would think starting from Q1 98.I don't know what the duration of the contracts are,perhaps 6 months to 1 year. <<1) CPQ numbers and statements are false and they managed to fool their auditors and the public. Very unlikely as it does not appear to serve any purpose. <<<2) CPQ has achieved phenominal productivity and economies of scale gains. (My personal choice)>> More likely scenario.

To: Obewon who wrote (14764)	1/24/1998 12:00:00 PM
From: hpeace	Read Replies (1) \| Respond to of 97611

thread, cpq contracts are ususally review per qtr. but, a contract could state a price drop that is planned. January should review cost. But, even with contracts in force, many of the vendors would drop cost then since comaq doesn't single source vendors. at their volumes they cannot. so a seagate may have dropped inorder to get some of WDC's share. Repeatedly, compaq gets better prices becasue of economies of scale. remember cpq volume is about equal to over twice dll now. cpq margins bec. ofall the accuals and reserves I talked about won't go to 45%. maybe close to 30% if cpq gets phenominally lucky