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

To: Elwood P. Dowd who wrote (49201)	2/22/1999 5:55:00 PM
From: rupert1	Read Replies (2) \| Respond to of 97611

Thanks El: Does this have the potential of creating a market worry about a hiatus in CPQ sales over the Internet, enough to affect this quarter's earnings.? "It seems nonsensical to me," he said. "They're throwing the baby out with the bathwater." _________________________ Industry News Compaq Suspends Direct Relationships With Internet Retailers By Mark Harrington Houston 4:38 PM EDT, Mon., Feb. 22, 1999 In a major sign of growing pains in the newly emerging Internet channel, Compaq Computer last week suspended authorization of all Internet-only retailers who sell its consumer Presario lineup. A Compaq spokeswoman, confirming the announcement, said the company expects to develop a new agreement within 90 days. Compaq's re-evaluation of the sales channel affects such major Internet retailers as Value America, Cyberian Outpost, CompuCom's PCSave division, Compaq's own Shopping.com and Buy.com, which drew attention -- and the ire of traditional retailers -- with a plan to sell PCs at wholesale prices. Major distributors who sell to the Internet channel, including Ingram Micro and Tech Data, have been informed of the change and told to suspend shipments until a new agreement is in place, the spokeswoman said. Compaq is also evaluating corporate resellers who sell primarily online, but hasn't taken action, she said, because the company has "very little participation" in the sector. Explaining the decision, the spokeswoman said the Internet channel developed so quickly that Compaq didn't have programs in place to deal with the intricacies of retailers selling below minimum advertised prices, which restricts the prices advertised by brick-and-mortar retailers. "This is an emerging channel that is developing so quickly that we just decided to step back and evaluate our programs," she said. Compaq informed Internet-only retailers of its decision in a letter last week. One retailer who received the letter said part of the impetus for the decision was Buy.com's wholesale pricing policies. He said his company will continue to procure Compaq product through other distributors, and didn't believe such an extreme measure was needed. "It seems nonsensical to me," he said. "They're throwing the baby out with the bathwater."