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

To: Glenn D. Rudolph who wrote (15578)	1/29/1998 9:24:00 AM
From: Elwood P. Dowd	Read Replies (1) \| Respond to of 97611

Glenn...thanks for appearing/reappearing on this thread. Your news posts and ESPECIALLY your timely upgrade/downgrade posts are greatly appreciated. Stephen

To: Glenn D. Rudolph who wrote (15578)	1/29/1998 9:38:00 AM
From: IncredibleHult	Read Replies (1) \| Respond to of 97611

Interesting note from an investment bank.. : We view the exclusive distribution agreement as a large customer win, but it needs to be placed in perspective. Tandy suggested about 10-12% of Radio Shack's $3.2B in annual sales is associated w/ computers and related products, or about $320-$380M. Assuming $300-$350M of it is PC's, this represents less than 1% of Compaq and DEC's Proforma sales and likely much less of the profit stream. Also, at least a portion of Radio Shack Presario sales will cannibalize other retail sales such that the $300-$350M represents a ceiling in the first year or two. The agreement is similar to the successful approach that Apple and CompUSA initiated last quarter. Adverse affects on the direct vendors is unlikely. Gateway country stores are still a much more efficient approach as it lacks channel conflict, can effectively leverage the Internet without conflict, contains zero inventory, are dedicated to PCs, carry larger PC dedicated floor- space, and have a much more focused, and probably better trained sales and service representatives. Similarly for Dell with the exception that Dell has not adopted the country store approach. While on the margin a positive development for Compaq, in the larger picture this agreement will provide only limited incremental earnings. In the near-term, Compaq probably has higher priorities and execution challenges.