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

To: Kenya AA who wrote (50354)	2/27/1999 6:54:00 PM
From: JRI	Read Replies (3) \| Respond to of 97611

Thanks for your hard work and posts...I appreciate it very much... With the risk of getting tomatoes thrown at me here...my take on this is that (1) Compaq did stuff some indeterminable amount in 4Q, and that dealers are forcing them to work it off in Jan/early Feb..(2) Launch of Pentium III did hurt Jan/early Feb. sales....if CPQ was "recommending" to their customers to wait until launch of III, it is because they would look silly (providing bad service/advice) if they tried to dump end-of-line II units on them before Pentium II launch......basically, the customers probably told CPQ (and Dell) "we are waiting for the III" and Compaq/Dell/etc....agreed...had no other choice... (3) Sales will be stronger (y-o-y) in Feb/March...allowing Compaq/Dell/etc..to report pretty good quarters (especially given lower expectations for both)......Pentium III, Y2K effect will kick in.. I would find it hard to believe if PC sales are NOT fairly strong in Feb./March (and, overall for the quarter)...after all, EVERYONE (analysts, IDC/Dataquest, Michael Dell & EP) ALL claimed that there would be a spike (of some sort...)in PC sales......I can't believe that they could all be so wrong...(especially given how weak PC sales were in Q1, '98...the y-o-y's should improve).. Can't speak for the Dog's on his comments...hope he is feeling better.. What is most concerning to me here is that it looks like Compaq stuffed...and leading up to the quarter, and early January..nary a word about it from management....those days were (supposed) to be over........I would rather they come out and say "we put extra inventory in the channel, so that we would not disappoint any customer(s) in case, if end-user demand would be stronger than anticipated"...although, we satisfied all our end-user needs during the Christmas period, we were left with excess inventory in the channel....as a result, we expect a bit of a slow-down in January/early Feb. in order to work off this excess inventory....this sort of thing should have been mentioned before last week...........as opposed to...... (hoping, I guess, that they could "grow" their way out of the inventory overhang.......and then, having to announce later they are below plan...).. It comes down to a matter of trust....I would have preferred a little more conservative, straight-forward explanation to these issues (besides, "We are kicking Dell's butt"...)..It has made me uneasy about the little CPQ I hold...Sorry, that's the way I see it...