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Politics : Formerly About Applied Materials -- Ignore unavailable to you. Want to Upgrade?

To: akidron who wrote (17399)	3/9/1998 12:20:00 AM
From: Big Bucks	Read Replies (1) \| Respond to of 70976

Aki, Yea, but the trees are still there. BB

To: akidron who wrote (17399)	3/9/1998 12:22:00 AM
From: akidron	Respond to of 70976

***sort of "Off Topic" but actually right on it**** as I have been trying to say DEC will cause CPQ more pain.... from the intc thread (I'm) looking to buy below $60... it will be my first call position on the rebound, because it is only when they start to recover that amat can.... To: Jules V (50201 ) From: Joey Smith Sunday, Mar 8 1998 11:51PM EST Reply # of 50206 All: Interesting article about CPQ's ODM model. Could explain some of Intel's shortfall: Compaq CFO Mason: ODM Is Critical (03/07/98; 1:25 p.m. EST) By Joe Wilcox, Computer Reseller News Compaq Computer Corp. CFO Earl Mason told CRN the company's Optimized Distribution Model (ODM) is crucial in reducing end of quarter sell-ins into the channel. Although he refused to pledge that end of quarter sell-ins would end altogether, Mason said that the goal of ODM is to "level out" sales so there is not a skewed sell in to the channel at the tail end of every quarter. "I know we use the term channel stuffing in this industry," said Mason. "This industry has sort of been operating in a way where month one we do a little bit, month two we do a little bit more and month three we do a lot. ODM is designed to flatten out that skew so this doesn't happen." "You're always going to have sell-ins in front of product transitions," said Mason. "Youre always going to have sell-ins especially in the options space at the end of quarter. That will never go away. But what will happen in that (ODM) environment is that they'll lessen." Mason spoke with CRN after the company stunned Wall Street by reporting that it will post results lower than expected with earnings at break even at best and sales flat with the year ago quarter. Mason said the ODM effort, which Compaq expects to have fully implemented by the end of the second quarter, is a "bold move" to reduce channel inventories. When asked about implementing two-week price protection starting July 1, Mason said that would have to be worked out with channel partners. "Our original target for desktops was two to three weeks, but our guys are telling us that for the server line, if they go below four their sales out (is affected)." Mason said channel partners were taking the lead in helping Compaq optimize its channel reengineering effort, which he said is crucial to getting Compaq back on track. "Where we are is where we had planned to be with ODM. We got the BTO [build-to-order] stuff going, and we're working with the channel right now on the channel configuration program and the CCP (Channel Configuration Programs)." When asked how many commercial PCs were being built to order by the channel right now, Mason responded, "I don't know. That's my honest answer. We've got the build-to-order capability now up to 100 percent in North America and 100 percent in Europe at Compaq," Mason said. "What we're trying work out with the channel are the CCP programs, and I think that we got four of them up. We're trying to roll those out as the channel partners want us to." Mason said that year-over-year, Compaq would see sell-in numbers lower than the year-ago quarter because it is hitting its ODM goals. Mason said that "there's growth in the North American market, but we thought it would grow faster." "The sales out, in and of itself, isn't half bad," Mason said. "The problem is some of the sales out did not meet our existing plans for the first quarter." Mason said Compaq didn't do as well as its internal forecasts. "What I saw happening at the beginning of February when we took pricing, I saw our competitors move in that arena pretty fast with us. Therein lies our issue." Mason said Compaq decided to "take an additional pricing and promotional reserve" and "cut back on the number of older products we were putting in the channel." The CFO wouldn't say exactly what extent the company was cutting back commercial PC manufacturing, but he described it as "fairly dramatic." The company is only manufacturing newer products, he said, as it phases out the older. Mason said these actions would prevent Compaq from taking an inventory write down during the first quarter. He did not think there is a general slow down in PC sales in North America. He described Compaq's position as one of having to be more price competitive. Mason also noted that Digital Equipment Corp. server sales are off in the wake of Compaq Computer Corp.'s proposed acquisition of Digital. He said competitors are targeting Digital customers and confusing them. "But that's life in the competitive world," he said. "And I fully expected that to happen."