Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

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

To: Adam Nash who wrote (24437)	4/15/1998 6:19:00 PM
From: Elwood P. Dowd	Respond to of 97611

cbs.marketwatch.com Stephen

To: Adam Nash who wrote (24437)	4/15/1998 6:28:00 PM
From: Eddie Kim	Read Replies (2) \| Respond to of 97611

Adam, I basically agree with you. however I have one question: Anyway, unit volumes were actually up, but revenue was down. However, if you think this is all just "cost-cutting", you are mistaken. Apple's current product mix, especially PM G3s, is very cheap to manufacture. They sold more machines, yet revenue went down and margins went up. How can one then explain their profit? It has to be due to cost-cutting measures. You state that the G3 is cheap to make. This counts as a cost-cutting/streamlining measure. I agree with your statement that Compaq should tell us the margins for the sub-$1000 machines. I'm not too sure how we are getting the short end of the stick, but I think management needs to re-think this market and determine how beneficial it is to Compaq. -Eddie

To: Adam Nash who wrote (24437)	4/17/1998 10:02:00 AM
From: rudedog	Read Replies (3) \| Respond to of 97611

I have asked several senior CPQ people in the Sales organization, and in the product groups - the response has been very consistent. The consumer machines (presario) all have good margins, including the low priced models. CPQ has no incentive to take a bath on these products since they are selling as many as they can make, demand far exceeds supply and sales are up more than 100% year over year. In the commercial line, older products being sold at low prices are at much reduced margin, the goal is clear out the inventory in advance of new products. The newer commercial machines in this price band are lower component cost and have good margins, even the very low cost sub-1K machines. CPQ is in this business to make money long term. The idea that CPQ is creating a low-margin product line is nonsense.