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

To: Knighty Tin who wrote (46310)	1/30/1999 5:59:00 PM
From: rupert1	Read Replies (1) \| Respond to of 97611

Michael: The flaw in your logic is that if Microsoft is forced to break up its monopolistic business model by Justice, then both it and the component spin-off companies will probably make more money than the conglomerate. Look at LU and ATT. As for the commodization of boxes or semi-conductors or whatever: commodities make money, industry rationalisation takes place and diversification inevitably appears. COMPAQ is on the path of diversification - 40%+ of its revenues are from enterprise including services: Compaq is making good margins from its "commodity" line of boxes: Compaq has $4 billion in cash and more to come into the kitty from operations and from an AV spin-off, I think you will see this money used to acquire competitors or otherwise "rationalise" its place in the industry.

To: Knighty Tin who wrote (46310)	1/31/1999 1:37:00 PM
From: Jim McMannis	Read Replies (2) \| Respond to of 97611

Mike, Good to hear from you. RE:" A channel for refurbed and returned inventory is not the same thing as a channel where you can ship crap and call it sales, even if you have to double or triple your receivables to do so, which is what Compaq has."... Are you saying that DELL doesn't count as sales all the old and returned items that it sells through its liquidation outlets? How do you know that this is how Compaq gained market share? Compaq ran into inventory problems at the end of 1997 if I recall and had to start stuffing the channels back then yet I didn't see an increase in market share relative to Dell until lately, long after that inventory was gone. If anything, and if Compaq has increased market share relative to DELL is because Compaq has a better presence in many foreign countries than Dell and some of these countries are coming out of recession. Also, Compaqs direct order strategy appears to be working and taking some of the lost ground back from Dell. Another thing could be price reductions in the server business steming the onslaught from DELL in this area. Dell will even stick in servers on a trial basis with a "pay us if you like it" policy. ----- RE:"I don't never said that pcs would never sell under $1000. My schtick has always been that they are like commodity color tvs and dropping in price like a rock. I did say that high monitor prices are the limit to how low a system can go, and they still are. ---Well, I still have copies of our conversations on *P from 3 years ago where you said you did AND I see you are still touting the PC as a commodity reason for doubting holding boxmaker stocks. Actually your argument has some merit until you look at how some of these boxmaker stocks have done over the last few years. DELL, IBM, Gateway, Compaq are all up big time. Perhaps you, like many Wall Street Types, forgot that the computer markets are still in a tremendous growth phase and haven't reached anywhere near cyclicality or saturation. Then there is the internet craze. Certainly bolstering sales as well as the obsoleting and replacing of computer products due to the Y2K problem. Kind of hard to see this coming a couple years ago unless you were some kind of visionary. ---- RE:"As far as the monopolies go, you may not have noticed, but Intel no longer is one, losing market share hand over fist. <G> I like to buy puts on dying monopolies that are still perceived as great cos. And, though I hope Microsoft is zapped by Justice, I am not betting on that one except as a gamble. That monopoly is not in my investment portfolios long or short. -- Well, since Intel can still dictate prices and on a dollar volume basis still maintains over 90% of the sales in the CPU market AND actually increased profit margin over the last quarter.... one might say they are still a monopoly. Granted, they lost some market share but have addressed this problem well with their low cost Celeron line. And remember still that they are still the only cpu maker that can "deliver the goods" in mass quantity with high yields and superior process technology. Although many would like to see these monopolies tumbled, remember, they didn't get where they are being stupid. Jim