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

To: FUZFO who wrote (17896)	2/22/1998 4:26:00 PM
From: Obewon	Read Replies (1) \| Respond to of 97611

A couple of questions for the thread to get people focused on the future (rather than DELL's past). 1) Intel's Merced chip is due out in just over a year. What will its affect on the sub-$1000 market (considering their price will be too high to include in this segment)? MY VIEW: Could significantly hurt CPQ since Intel will be putting all its marketing muscle into Merced's advantages over Pentium, Pentium II, and their knockoffs from AMD and Cyrix. People will be more hesitant to buy a computer with a PERCEIVED tech disadvantage. Neither AMD or Cyrix have an equiivalent chip anywhere near the market so chip prices may not fall as fast as with the Pentium and Pentium II chips. The rise of the sub-$1000 market has occurred not just because prices have decreased but that the gap in tech advantage from high end machine and low end machine has narrowed significantly. There is little software these days which can't be run well on even low end machines. The Merced chip with an accompanying 100MHz bus combined with Windows 98(/NT wannabe) will most likely seriously change this equation as software written for this will see serious performance degredation on a lower end machine. 2) Prices on computer components have fallen greatly over the past year as memory chips, disk drives, CPU's, modems, and CD-ROMs have seen overwhelming competition and overcapacity in the market. Will this continue and what will its affect on CPQ be? MY VIEW: While I believe that competition will be as fierce this year as last, I think the computer makers have seen the bulk of the component price drops for the near future (one to two years) except in the area of CPU's which will drop quickly the closer we get to the Merced rollout. While all computer makers will be affected, those who have used their low inventory as a strategic advantage (getting new products to market quicker) will be hurt the hardest as this won't make as much of a difference as in the past. The transition from CD-ROM to DVD may also slow the pace of component price drops as DVD is significantly more expensive than CD-ROMs currently. These are of course my views. What are yours? OB

To: FUZFO who wrote (17896)	2/22/1998 4:43:00 PM
From: peacelover	Read Replies (1) \| Respond to of 97611

Hi FUZFO! Thanks for your kindness in filling me on Mr. Cramer's statements. But I have a heck of a time trying to understand what he is trying to say about CPQ. He rumbles too much. I guess that is part of his duty. No offense, Mr. Cramer, just my opinion. I hope he is not saying he regrets buying CPQ. I don't anyway. You are right. Once again on CPQ thread I am in good company of people like you. peacelover

To: FUZFO who wrote (17896)	2/22/1998 4:44:00 PM
From: Jack T. Pearson	Read Replies (1) \| Respond to of 97611

FUZFO, Thank you very much for posting that article about the rush to judgement by a TSC correspondent. What a remarkable admission on Cramer's part! No one knows how the Compaq acquisition of DEC will turn out. There are lots of opinions, but no one KNOWS. IMHO, the price of CPQ since the announcement reflects the uncertainty of many investors about the wisdom of this acquisition. If they had a lot of confidence that it is a positive development, CPQ would have run up a lot. If they had a lot of confidence that it is a negative development, CPQ would have declined a lot. Neither happened. I suspect it will be many months before we have significantly more information than we do today. I would seriously question the competency of either Compaq or DEC management if they were to make statements that might risk Federal approval of the acquisition, just for the sake of helping short term investors. Jack