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

To: JRI who wrote (35255)	10/22/1998 8:55:00 PM
From: PCSS	Read Replies (1) \| Respond to of 97611

Conceptually, what Gerstner said was that services and networking are the key to the future. PCs although still being bought were tiuted as the everything that would enable the customer (company) to put their solutions together (BTW, IBM's PC sales haven't been doing very well for awhile). Gerstner used an excellent analogy of a car (in lieu of a corporation's IT solution) to demonstrate why services are and will be the critical piece going forward. The way the IT vendor market is, is like whena company wants to buy a car and has to buy the wheels one place, the engine another, the axels another, the tailpipe somewhere else, etc., etc. The IT client company executives are quite annoyed and frustrated so the solution is GO TO A SERVICES COMPANY WHICH CAN DO EVERYTHING. Yes, this theory or modus operandi is excellent and YES CPQ seems to be doing ALL that is necessary to address IT Executives problems recommend the parts, sell the parts, consult and service. Yes too, CPQ and IBM will be competitors for a long time to come .... and PCs will play a role but only a role. Michael

To: JRI who wrote (35255)	10/22/1998 8:55:00 PM
From: Elwood P. Dowd	Respond to of 97611

John.... unfortunately, I was interrupted a couple times during the interview and only caught bits and pieces. He did emphasize service and networking and, I think, talked of networking computers. Perhaps someone else can give you a good summary of his words. El Bloomberg News October 22, 1998, 4:59 p.m. PT Compaq to Woo Small Businesses With Direct Sales (Update1) (Adds closing stock prices.) Houston, Oct. 22 (Bloomberg) -- Compaq Computer Corp. is planning a new attack against rival Dell Computer Corp. with the planned introduction of new direct sales programs and products for small businesses next month. The new strategy, expected to be unveiled Nov. 11 by Compaq Chief Executive Eckhard Pfeiffer, will include a direct telephone sales force to focus on small and midsize businesses that aren't served by computer dealers as well as build-to-order products especially for these customers, analysts said. Compaq, the No. 1 maker of personal computers, needs to counter the strength of No. 3 Dell, which sells directly to corporate customers and has been narrowing the gap in market share between the two companies. Dell's growth has exploded as it takes advantage of lower costs to lure budget-conscious customers that don't want to pay a premium for services or retail markups. ''Dell is the goal everybody aspires to equal,'' said analyst Ray Boggs of International Data Corp. Compaq already has some direct sales initiatives through its DirectPlus program, which lets customers buy selected products direct over the phone or Internet and also lets resellers refer the buyer to Compaq. Austin, Texas-based Dell doesn't use resellers at all, which helps it keep costs low by limiting inventory that declines in value as it sits on warehouse shelves as well as eliminating the markup that dealers tack on products. That helped Dell boost U.S. shipments more than 72 percent in the second quarter, compared to just 11 percent for Compaq. ''(Compaq is) saying to their resellers, 'There is a segment which we are collectively forfeiting to Dell,''' said analyst Daniel Kunstler of J.P. Morgan Securities. It also is a segment that's growing faster than most other parts of the computer market. PC sales to small businesses are forecast to rise 32 percent this year, compared with overall PC sales growth of 6 percent, according to Dataquest Inc. Shares of Houston-based Compaq rose 9/16 to 28 15/16. Dell shares rose 1 15/16 to 58 7/8. Compaq's Pfeiffer will host a press conference in New York on Nov. 11 to discuss a new ''strategic direction for small and medium businesses,'' though the company declined to elaborate on any products or plans for a direct sales force. Compaq needs to be very careful in creating a direct sales force because that could strain relationships with the dealers and distributors that resell Compaq products, analysts said. Still, some analysts said the limited scope of this project could be widened if it is successful. ''They are putting their toe in the water. If it's successful, we might see more,'' said analyst Lou Mazzucchelli of Gerard Klauer Mattison, who rates Compaq stock ''hold.''