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Technology Stocks : Dell Technologies Inc. -- Ignore unavailable to you. Want to Upgrade?

To: W.B. Michaels who wrote (105349)	2/26/1999 1:31:00 PM
From: stockman_scott	Read Replies (1) \| Respond to of 176387

<<Clash of the Titans ---A New Fortune Article (3/15/99 issue) Why Compaq's Growth Won't Slow Dell David Kirkpatrick The battle of the titans in the PC business just gets nastier. When we ran into Eckhard Pfeiffer, CEO of global market leader Compaq, at a jazz party at the recent World Economic Forum in Davos, Switzerland, he sang a cocky tune about his company's resurgence against archrival Dell Computer. For years investors have rewarded Dell's stellar performance with a much richer stock valuation. But Pfeiffer suggested the tide of growth had shifted, and urged us to look into new figures from International Data Corp. The numbers seem impressive. Worldwide, Compaq gained a point of market share in 1998's fourth quarter compared with the third, rising to 15.4%, while second-place Dell lost about a point, ending the year at 8.4%. The shifts were even more pronounced in the U.S. Wall Street caught on in mid-February. First, Dell's stock sank 10% in one day, to $90, after two analysts lowered their revenue targets. BancBoston Robertson Stephens' Dan Niles cited "intensifying competitive pressures," including Compaq's recent moves to increase its direct marketing of PCs. Then Dell barely met earnings estimates and disappointed on growth, which sent its stock down ... But a closer look at the numbers shows that the fourth-quarter shifts are nothing new. Compaq has gained share against Dell in the fourth quarter for three of the past four years. The recent gain is more a function of product mix and seasonal sales patterns than any change in the industry hierarchy, says Mike Kwatinetz of CS First Boston. These same numbers show Dell's year-over-year unit growth continued at a torrid 56% pace, while Compaq's much larger base grew only 17% worldwide in the fourth quarter. The bottom line: Both companies keep getting stronger. As they do, they seem to resent each other more. With Pfeiffer and Michael Dell each talking about "eating their [opponent's] lunch," this will surely remain a messy food fight. Magazine Issue: Vol. 139, No. 5, March 15, 1999 >> -------------------------------------------------------------------------------------------------- I sure wouldn't bet against Michael Dell and his team. This article fails to address key issues like talent. I saw 2 of my grad school classmates in SF last night and they used to work for Tandem. They said the company lost its entrepreneurial spirit when it was bought out by Compaq. The top talent has left and those that remain are often looking for new jobs -- outside the CPQ umbrella. I think this is a symptom of a much bigger problem. IMO, CPQ is really having trouble attracting, motivating and retaining the BEST talent in the business. This is a MAJOR reason why I have stayed away from CPQ in the last few years. DELL still is one of the most desirable places to work and is much more successful than CPQ when it comes to developing a culture that top talent wants to work in. Intellectual capital is key in the high tech business. I also feel that DELL has a much better top management team led by a more humble, more focussed, and more effective leader. Beyond that, CPQ has demonstrated that MAJOR channel conflict problems will be tough to resolve. They also have not been very successful with their high tech investments (see the new issue of The Red Herring). To me DELL stands head and shoulders above their competitors in many crucial areas. If I had to own one additional firm in their industry, it would be Gateway (and NOT CPQ). Regards, Scott