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Technology Stocks : PC Sector Round Table -- Ignore unavailable to you. Want to Upgrade?

To: Yogi - Paul who wrote (5)	3/17/1998 4:24:00 AM
From: Pierre-X	Read Replies (2) \| Respond to of 2025

Re: Compaq Inventory A very interesting article indeed. Remember that the share price rollercoaster in the HDD sector began with similar comments from Seagate, the leader in that sector. We saw Western Digital and IBM siphoning market share away from the leader. Here we see Dell doing the same thing but even worse to Compaq. I found the following remarks in the article noteworthy: Compaq officials said Pentium MMX systems are the best-selling models, while Pentium II sales are just ramping up. Contrast that to Dell in the last quarter which, if memory serves, claimed the majority of sales from P-II systems? Ellett said ... Compaq and other PC vendors are not going into the sub-$1000 price band if it will lower its gross margins. There is an interesting statement. On one hand it could well be true given plummetting component costs. On the other hand, their apparently large inventories suffer real depreciation as a result of those very same component cost declines. I continue to believe that the ONLY event that can arrest the fall of PC average selling prices (ASPs) will be the arrival of the next "Killer-App" for the PC, like of like the coming of the Saviour <g>. You said: Obviously, everyone has accepted lower margins in home computers. Are lower margins in commercial hardware "in the market"? That depends on the degree to which commercial margins have subsidized lower home-PC margins. If substantial, then the PC makers dont have much breathing room, and supply will be inelastic. I suspect this is the case in the short run. The market is recognizing, and has recognized the relative competitive positions of CPQ vs DELL for several years now, awarding DELL the higher multiple. We can't know however if this has resulted from a market awareness of Dell's superior operating model or is merely a blind reaction to the impressive growth rates Dell has maintained over the last several years. God bless, PX

To: Yogi - Paul who wrote (5)	3/17/1998 4:47:00 AM
From: Pierre-X	Read Replies (2) \| Respond to of 2025

Re: Forecasts Adjusted PC sales growth to fall off in '98 news.com IDC is forecasting 13 percent growth for the PC industry as a whole in 1998 ... a slight decline from 1997's growth rate of 15.2 ... As investors we want expectations to be as low as possible, creating a situation of economic rents when the too-low forecasts are exceeded. Allow me to quote from one of my favorite writers, Mark Twain: In the space of one hundred and seventy-six years the Lower Mississippi has shortened itself 240 miles. This is an average of a trifle over one mile and a third a year. Therefore, any calm person, who is not blind or idiotic, can see that in the Old Oolitic Silurian Period, just a million years ago next November, the Lower Mississippi River was upward of one million three hundred thousand miles long, and stuck out over the Gulf of Mexico like a fishing rod. And by the same token any person can see that 742 years from now the Lower Mississippi will be only a mile and three-quarters long, and Cairo and New Orleans will have joined their streets together . . . There is something fascinating about science. One gets such wholesale returns of conjecture out of such a trifling investment of fact. <g> God bless, PX