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

To: rupert1 who wrote (55147)	3/30/1999 6:03:00 AM
From: rupert1	Read Replies (1) \| Respond to of 97611

WSJ ARTICLE TODAY - It appears that COMPAQ sales from direct have increased 100% since last quarter - from $1 million to $2 million a day - unless I have got it wrong. COMPAQ, through E-P, claims yesterday that 70% of direct sales since November have been to new customers, 50% of which have switched from DELL and GTW. Neither DELL nor GTW denied this when contacted. Notice, too, all the negative spin put on this news by those asked to comment. ___________________ March 30, 1999 Compaq to Offer Prosignia Line Through Several Large Retailers By CHRISTOPHER GRIMES Dow Jones Newswires NEW YORK -- Compaq Computer Corp. is again tweaking the way it sells desktop computers. In November, Compaq began selling PCs directly to small and medium-sized businesses. Selling direct -- taking orders over the phone or Internet, then building and shipping the PCs -- has been the key to challenger Dell Computer Corp.'s rapid rise. Compaq says it's selling $2 million worth of PCs a day to the small-business market with the direct program. Company Profile: Compaq Computer But Compaq said Monday it will offer these same small-business products, known as the Prosignia line, through retailers CompUSA Inc., Office Depot Inc., OfficeMax Inc. and Staples Inc. The idea is that Compaq customers can now buy the products any way they want to --direct or in a store. The announcement comes only a month after Compaq told some analysts that sales to small and medium-sized businesses were weak in January and February. While a company official declined to speak about the move, some analysts said they thought there was a connection between the updated strategy and the sales weakness. The small and medium-sized business market has long tempted the big computer makers, but it's been a tough one to break into. While the top five computer makers dominate the corporate PC market, many small businesses buy their computers from local mom-and-pop shops. Enrico Pesatori, senior vice president of corporate marketing at Compaq, said the new program was designed because many small businesses are more comfortable buying retail. "Our direct business is going very well," Mr. Pesatori said in an interview. "But on the other hand we have to provide products the way customers want to buy them." Mr. Pesatori wouldn't comment on whether weak sales in January and February led to the introduction of the new program, citing the company's quiet period. Under the new program, computer distributor Ingram Micro Inc. will set up shop on Compaq's campus to help assemble and ship the Prosignia machines. Compaq has had similar arrangements with distributors Tech Data Corp. and CompuCom Systems Inc. for a while. Compaq tested these resellers' mettle from time to time as it flirted with the direct-sales model, analysts said. "Sales in the small and medium business were weaker than planned in the first six weeks of the quarter, so now they're crawling back" to the resellers, said David Wu, an analyst at ABN Amro, who rates Compaq a "hold." "Until they become Dell, they need the resellers," he said. Daniel Kunstler, an analyst at J.P. Morgan, said he couldn't help but think the new program was linked to weak sales in the early part of the first quarter. But he added that the new program seems "to serve everybody's needs right now." In a conference call, Compaq Chief Executive Officer Eckhard Pfeiffer said the direct program has been successful. He said 70% of the company's direct sales since November have been to new customers. "Almost half of the new business has switched from Dell" or Gateway Inc., the number-two direct seller of PCs, he said. Compaq was originally set to talk about the new arrangement at a New York press conference Tuesday. But, according to a spokesman, reports from Wall Street analysts and online trade publications began to circulate Friday, causing the company to bump the announcement up by a day. Contacted later, a spokeswoman at Dell said "there's certainly room for our competitors to become more efficient." Gateway didn't have an immediate response to Compaq Chief Executive Pfeiffer's charge that Compaq had taken market share from Dell and Gateway.