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

To: isdsms who wrote (54895)	3/26/1999 5:53:00 AM
From: rupert1	Read Replies (1) \| Respond to of 97611

March 26, 1999 WSJ - COMPAQ Compaq Boosts Sales Incentives On Recently Introduced Prosignia By GARY MCWILLIAMS Staff Reporter of THE WALL STREET JOURNAL HOUSTON -- Compaq Computer Corp., hoping to quell unease among large resellers and boost PC sales during a lackluster period, is sweetening sales incentives on a recently introduced line of machines. The changes, and others expected to be unveiled Tuesday by the world's largest personal-computer maker, are intended to make it more profitable for resellers to carry Compaq's Prosignia PCs, an important line in an increasingly tough battle with direct-sellers Dell Computer Corp. and Gateway Inc. In addition, Compaq is expected to roll out a ready-to-use product, with e-mail and other services already loaded for small business. Compaq created a firestorm among its dealers when it began selling Prosignias directly to small and midsize businesses in November. The machines have sold well over the telephone and the Internet, helping Compaq boost its share of the small-business market, but have been largely spurned by the big resellers who sell the majority of Compaq's PCs. Robert Fernander, a Compaq vice president responsible for North American business, says sales to distributors, such as Tech Data Corp. and Ingram Micro Inc., "were not performing to expectation." As a result, Compaq this month increased by two to four percentage points the fees paid to distributors, and further allowed them to use Prosignia sales to win better terms on other Compaq products. While some analysts say the moves reflect Compaq's difficulty juggling reseller and direct sales, Mr. Fernander said Prosignia sales continue to exceed the company's internal projections. He said Compaq's recent warning about lower-than-expected sales to small and midsize businesses reflected a seasonal slowing exacerbated by spending on year-2000 bug fixes. The higher fees should boost sales while adding just 1.5 percentage points to Compaq's PC sales costs, he said. Some companies welcomed the changes. Bob Wilkins, vice president of sales and marketing at PC Connection Inc., Merrimack, N.H., which sells Prosignias to small and midsize businesses, says until the added incentives, "we didn't market [Prosignia]" aggressively. Now, though, he said, "That product, as it sits now, is as profitable as any." Craig Johoski, vice president of Compaq dealer Clark Technologies, Houston, however, would like more explanation. "I've asked, 'Can I sell this on my Web site?' " he says. "I can't get an answer." Still, Prosignia sales have helped Compaq boost its share of sales to small and midsize businesses. A new survey by Access Media International Inc., a New York market-research firm, puts Compaq's share of desktop PC sales to small businesses at 18%, up from 15% in July 1997.