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Technology Stocks : COMPAQ - WHAT'S LIES AHEAD ?!? -- Ignore unavailable to you. Want to Upgrade?

To: Lbags who wrote (11)	2/22/1999 4:41:00 PM
From: rudedog	Read Replies (1) \| Respond to of 17

What is your take on Dell's Q4? I was surprised at the amount of the stock price drop, given that DELL actually hit the EPS number. I commented on my thoughts in a PM to another poster, which I will share with you. I think that CPQ's good report helped DELL run up, since CPQ and DELL seemed to be the obvious 4Q winners. But DELL did not do as well as I was expecting in 4Q, especially in the enterprise, which is key to their ongoing revenue growth as well as maintaining ASP. I don't see any relief in that area for dell in the next few quarters. They are going to get their ass kicked in the storage business by CPQ and IBM, both of whom have a much better enterprise play and the service components to make it work. Both IBM and CPQ are targeting HP and SUN storage business (i.e. sell the storage for a SUN or HP server), as well as EMC. DELL is just collateral damage in that game. But many, including lots of folks at DELL, had placed high hopes on storage. I was also surprised that DELL is talking about a sub-1K machine. That is a fiercely competitive space where the build to order model adds nothing and the biggest players have the edge. They are likely to take a beating there with little benefit to either the top or bottom line. So all in all I am not too upbeat on DELL's prospects near term. Since I missed the opportunity to sell some of my holding at the high, I will hold for now but unless I see something that looks like a strategic play from them, I will probably start working my way out of DELL on any rise into the next earnings.