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To: Petz who wrote (4169)	2/2/1998 2:08:00 PM
From: greg nus	Read Replies (1) \| Respond to of 6843

Petz, In short I agree with your conclusion. Based on Grove's modern model for the industry, Only the Parinoid Survive. He lays out the clasic comparison of the old IBM. That is why I put forward a different senerio for CPQ/AMD. A larger equity stake... but not controling...CPQ's single largest componet cost factor is the Intel CPU. Also the CPU is the critical component for boxmaking. So goes Intel so goes CPQ. Right now CPQ cannot slave Intel, Intel is a much larger company the CPQ. So the best stratigic stratgdy for CPQ is to control or semi control a cheap source of CPU's hense AMD. A perfect example of how effective this would be is the cybermax example. CPQ gets cybermax's AMD'S chips. Cybermax makes no sale...gets no revenue...This could be a formatable position for freezing out a majority of the lower trier cost sensetive players...Now extend the stratgdy by selling amd dec's alpha technology and you can paly the game to a lessor extent on the highend. Grove points out that Intel biggest worry is the free flow of stratigic componet parts in a global economy. Intel is puting it's money where Groves mouth is by investing in the stratigic choke point companies while aquiring the technologies it beleives are critical to it's future. For a boxmaker what more stratigic than the CPU?? Peiffer's entire enterprise now rest in the hands of groves enterprise. For 5 to 6 billion Cpq could hedge itself with the AMD buyout. For much less they could capure Amd as a slave foundry. Exchange Dec's Alpha to AMD for cheap chips. Infuse enough equity into AMD to move to 49% clean up the board... clip Jerry wings back to two lunches a week at Le'Dome. Sell Alpha to AMD on a long term payment plan ala chip exchange. Did Cpq buy dec to get into chipmaking??? Bad news ahead for DEC employees I perdict the 86,000 dec workforce will eventually be trimmed to about 25,000. The Cpq/dec combined workforce will level out at about 65,000 down from 123,000. Peffier will go through dec with a buzz saw, just to get back to normal operating ratios cpq now enjoys. It is going to be fun to watch... except for the personal suffering of the effected carnage on the personell. I think Peffier makes Grove look like a pussycat!