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

To: JEFF GREGERSON who wrote (22787)	3/20/1998 11:08:00 PM
From: van wang	Read Replies (1) \| Respond to of 97611

I think a better comparison is box makers to disk drive makers incidentally, share prices of disk drive makers have been cut between 50% to 70% before they have stabilized since they reported inventory glut and pricing pressures....commodity products what is compelling is that the component makers appear to be leading indicators for demand and overcapacity...the dynamics are very similar...the problem is that they have yet to pull out of their problems which does not bode well for box makers ... because its too competitive to keep profits from discounts...and demand has not increased to work off overcapacity I actually think that temporarily switching from CPQ to SEG may be a good idea and still participate in the PC growth...SEG has got 6.73 in cash...then swap back in when things clear up abit

To: JEFF GREGERSON who wrote (22787)	3/21/1998 2:51:00 AM
From: Stephen	Respond to of 97611

Jeff, I was half way through this response when AOL ditched me .. then it did it again ... and to think I'm long the stock !!!. Anyway ....the deal with the networkers was somewhat complex ... and this is going to be shorter than my original response I am afraid. Take what you will from it. As a general comment ... all networkers suffered from the Cisco effect. They are so much bigger, market their offerings better and can provide better end to end solutions. Not only that, they do it whilst maintaining margins that lesser players like Ascend and 3Coms were cutting in areas where Cisco had the business. Conversely for Cisco, they also, offered cheaper prices where they were competing with Ascend and 3Coms. Added to that Ascend had a few more things going on. Traditionally they had concentrated on ISP's and had good cashflow. As they had to concentrate on bigger fish they needed a more end to end solution and so acquired Cascade at a very good price. But in going for bigger customers, instead of getting quick payment, the bigger customers wanted a three month+ grace period. Then the merger was between two companies at opposite ends of the country, and some excuses were made for that. Hot new products started to have problems ..the MAX TNT was know to overheat if I remember correctly and the number of products from different companies started to flood the market. 3Coms targeted the lower consumer end of the market and depended on high sales. Channel stuffing was reported and later found to be true. The US Robotics merger was dilutive and they tried to get rid of some of their channel stuffing cost through related one time charges to the merger. However ... this still came back to haunt them. Both companies suffered from the lack of modem standard they were committed to which only served to confuse & disillusion investors. But in the end ... they both didn't execute as well as Cisco in an increasing competitive market place .... and probably didn't stand much chance to. As for comparisons with Compaq ... on the surface they are obvious .. but if you know the detail it really is apples and pears. Symtoms are similar, but the ability to manage the competitive situation is not. There are many things we have to take on trust with Compaq, but the odds are not so heavily stacked against them. Sorry if this rambles ... my first post was more coherent ... and longer !! Regards Stephen