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

To: FR1 who wrote (27113)	6/4/1998 9:12:00 AM
From: rudedog	Respond to of 97611

Franz - How would you financially justify Alpha? Great questions. lets look at the assumption that Alpha needs to run more than Unix and NT to get the volume. 1. The magazines are talking about non-corporate users. That's the market that CPQ's consumer division sells to, not the mainline commercial desktops, which will shift heavily to NT this year. MSFT is recommending that corporations NOT upgrate to Win98 but instead go to NT. I think you will find that the MIS director who does NOT shift to NT will be the one at risk. 2) I don't know the current cost estimates for Alpha but when it was at DEC the FAB was the killer expense, design and R&D was between $50M and $100M. CPQ / DEC spent $1.8 billion on R&D last year. Expenses for Alpha R&D are in line with what CPQ spends for its other products, even with conservative volume forecasts. 3. No one will recommend running WinXX on Merced - Merced emulates X86 in silicon and will be slower than native IA32 chips, so there will be a huge push to run only 64 bit OS (read NOT Win98) on merced. So we will have Intel and MSFT pushing the corporate users (which is after all CPQ's bread and butter) to shift ALL their desktops to NT. This may take a little while but not long - NT is a much lower cost and more efficient desktop OS for corporate users than Win95 or Win98, not to mention more reliable. I have seen both sides of this argument both in the press and among CPQ engineering people but as more and more data comes in it looks like Alpha is quite viable financially given CPQ's volume, and I think that CPQ will convince the customer base and investment community of the wisdom of that course also.