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

To: StockMan who wrote (16460)	2/3/1998 6:55:00 PM
From: robbie	Read Replies (1) \| Respond to of 97611

Stockman, come help dig me out from underneath all this money. <gggg>

To: StockMan who wrote (16460)	2/3/1998 8:10:00 PM
From: John Biddle	Read Replies (1) \| Respond to of 97611

I'll reply one last time and then stop, since you no longer want to continue the discussion. In using 2 brands (DEC had 1.3% marketshare), causes confusion among the customers. I don't understand this. Compaq will not be trying to make sure that everyone thinks of DEC PCs and Compaq PCs as the same box with a different label. Quite the opposite. Why would another brand name create confusion? Does the existence of Dell confuse Compaq purchasers? Does existence of DEC currently confuse Compaq customers? If this is done correctly, market will think of the two brands as separate, even though many people will know that DEC is owned by Compaq. In use 2 diverse lines for essentially the same PC's, does not allow for economies of scale and affects profitabiliy. Economies of scale come from being able to get best supplier pricing, and leveraging every manufacturing improvement over many units. I think CPQ can get great pricing for DEC for PC parts, and as they make the manufacturing at DEC like that at Compaq, they can continue to gain the value of all the little efficiencies over a huge number of boxes. Compaq with its BTO model believes it has negated all of the advantages of direct sales. While I think Compaq's BTO strategy is a good one, it cannot achieve the full benefits of a pure system like the direct's use. The reseller's still have to make money; money that the directs get to keep or use to keep prices low. Once again wait for CPQ to announce its plans. While I agree that this is just speculation, and will have no influence on what Compaq does, I think it's fun to speculate on things like this. If you were the president, what would you do in this situation. How would you play these cards. One of the things I like about SI is the opportunity I get to converse and exchange ideas with many intelligent people with different backgrounds, experiences, values, etc. I don't have access to very many people like this who also share my interest in tech stocks. I wonder how much your opinion on this comes from the fact that you think this merger is a bone headed idea? I suspect that selling out as much of DEC as possible fits better with minimizing the great risk you see in the DEC purchase. (I hope I'm not misrepresenting your opinion.) Me, I think the merger is a brilliant move (as was Tandem purchase). You are right about the risk. I think you even understated the case, given Compaq's specific merger history. I think, though, that the benefits are so great that the risks are worth it. Can you imagine how great (and profitable) Compaq will be if they are successful. And they will be successful; they have to be. This is a bet the company move.