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

To: Pruguy who wrote (50902)	3/2/1999 6:22:00 PM
From: rudedog	Read Replies (3) \| Respond to of 97611

any way of clarifying how the other opinions are so different than yours? I would suggest that they don't know what they are talking about. Either that or they have a way different definition of a small business than I have. CPQ does not consider ANY of the consumer business to be SMB. The desktop business is more than 80% into the fortune 1000 - surely not SMB in anyone's mind. Most definitions of SMB include the notion of 'less than 25 users' - less than 5% of CPQ's desktop business. In servers, classic compaq had three main components, divided by OS. These were NT, Netware, and SCO, and the rough percent division by units was 40, 40, 20. Tandem and DEC business combined is about the same size as the classic Compaq server revenue. NT and Netware servers are evenly more heavily sold into the fortune 1000 than desktops - probably in excess of 90%. CPQ up until recently had almost no way to sell to any other class of customer. SCO is an exception to this - SCO business is driven by VARs who specialize in various line-of-business applications in specialty markets. Many of these would qualify as SMB - dental and doctor office packages, for example. But many are larger systems, including bank branch office solutions outside of the US. Even if the SCO business is 5% of all server sales (which I think is high) and we call it ALL SMB, it does not put a bunch of revenue in this category. The new ProSignia line was specifically created to correct this deficiency in CPQ's product line. It was designed to solve the various problems which had kept CPQ out of the SMB market. Direct sales got around the lack of an SMB channel. VAR programs were expected to stimulate small systems integrators to use ProSignia instead of white box. Low pricing and a different brand identity also help. But the ProSignia line is so new that it is not yet a big part of the sales mix. And everyone tells me that ProSignia is way ahead of plan, some people say it is at twice plan. So I can not see how this would affect more than a few percent of sales. Admittedly a few percent of sales can cut into earnings in a significant way, but I think that the analysts and the street have over-reacted to CPQ's remarks. I will be interested to see if CPQ offers any additional guidance. If they have a big problem, it has to be somewhere other than SMB.