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

To: Ibexx who wrote (20501)	3/7/1998 9:47:00 PM
From: Thomas C (Hijacked)	Read Replies (4) \| Respond to of 97611

Do you guys think Dell will follow with same news and get SLAMMED? What makes Dell so damn different from the Compaqs of the world anyway!!? Tom

To: Ibexx who wrote (20501)	3/8/1998 10:16:00 AM
From: Ibexx	Read Replies (1) \| Respond to of 97611

Thread, Content of the following article has been posted before, but I am adding the source URL: Pfeiffer: Q2 Results Could Be Affected (03/07/98; 1:30 p.m. EST) By Joe Wilcox &Steven Burke, Computer Reseller News Compaq Computer Corp. Chief Executive Eckhard Pfeiffer said that the troubles that forced the No. 1 PC maker to warn that it will break even at best in the first quarter could run into the second quarter. "It would not be appropriate at this point to label this a one quarter issue when we say we are driving the ODM (Optimized Distibution Model) to be at the model level by the end of the second quarter," said Pfeiffer. "In addition, the signs of lower market demand can not be read very well at this point." "We are watching every signal we will be getting after this and then we will have a better understanding," added Pfeiffer. Pfeiffer's comments on the conference call came after Compaq warned that its first quarter results will be below expectations with sales the same as in the year ago quarter. The disappointing news came after industry bellweather Intel Corp. warned of disappointing first quarter results earlier in the week. "We do not see the level of sales out that we had anticipated in the first quarter," said Pfeiffer. "It is not a product issue. There is plenty of product." Compaq is taking aggressive pricing actions and implementing channel promotions in response to the shortfall. In addition, the company has cut back on its commercial PC manufacturing. "February was the key month to watch to make the judgement call (on) can we make it," said Pfeiffer. "As we saw more inventory in the channel we decided to cut back here and stay on our channel inventory reduction plan." Compaq would not specify how much inventory it has in the channel. The company has been grappling with excess inventory as it migrates to a channel assembly business model. Compaq has 20 times more Pentium and Pentium Pro desktop-PC inventory than Hewlett-Packard Co. and five times that of IBM Corp., according to spot-checks of seven distributors' online systems. More specifically, Pentium and Pentium Pro desktop-PC inventory from the spot-checks indicate HP has approximately 9,500 units in stock while IBM has 46,000 desktops. Compaq, by comparision, has 200,000 units. Compaq is aiming to have its ODM model in place with the channel fully by the end of the second quarter. The company had been aiming at implementing a policy of two weeks price protection for the channel at the beginning of the year, but it did not follow through on that plan. Compaq CFO Earl Mason said it is critical that Compaq have its ODM model fully in place by the end of June. "This is very important since we expect to close the Digital acquisition sometime in the second quarter," he said. "Having our distribution model working well will cause us a faster integration of both compoanies and allow us to take full advantage of that merger." The bad news from Compaq is sure to spark a debate about whether there is a slowdown in the PC market. There are mixed reports on that. For example, earlier in the week, distributor Tech Data Corp. reported a preliminary sales gain of 60 percent for the quarter ended Jan. 31. Jeff Matthews, general partner, Ram Partners, a Greenwich, Conn. fund, said the Compaq warning is likely to be followed by similar reports from other computer industry players."When the largest guy in the business tells you the business stinks you can't argue it is an execution issue or an inventory imbalance, " he said. "They haven't had a situation like this in five years." Compaq PC component suppliers and others will be hit, said Matthews. "Compaq us not going to accept break even results without making their own suppliers share the pain," he said. "They are going to demand a lot from their suppliers." techweb1.web.cerf.net Ibexx