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To: Scumbria who wrote (78500)	4/12/1999 2:53:00 AM
From: Process Boy	Respond to of 186894

Scumbria - CPQ vs. Retail PC's Here's an article that indicates CPQ is losing marketshare in the Retail Channel. It even has pie charts!! <g> zdnet.com InfoBeads: We called it For analyst Matt Sargent, Compaq's problems point up other challenges facing PC makers. By Matt Sargent, ZDNN April 9, 1999 5:10 PM PT Compaq has just pre-announced that Q1 profits will fail to meet Wall Street's expectations. The reasons for this are lower than expected demand and increasingly competitive pricing in the commercial PC space. If you examine Compaq's (NYSE:CPQ) numbers, one can see the making of these earnings problems in the price curves that are found in the retail and dealer pricing levels. Prices have been in a constant state of decline for some time. Although that may not be news, there are new twists that make the situation worse in the short term. [pie chart analysis of CPQ vs. et al in Retail channel] However the key question is whether or not this situation -- or at least the serious earnings impact -- is limited to Compaq, or whether it will be reflected in other firms' earnings. To be sure, there are issues that affect all vendors. The reality is that the demand curves are lower than they've been in some time. It's my sense that the direct vendors will fare somewhat better as they do more to "upsell" higher cost peripherals and are able to keep this money in house. Compaq may have suffered because of share problems in the commercial and retail sales sectors. But while this is certainly bad news for Compaq, I'm not sure it's a harbinger for other computer makers. All PC vendors are faced with demand and pricing challenges. Yet it appears that Compaq failed to meet analysts' estimates because of sinking market share. Clearly, Compaq would prefer to avoid this situation in the future and it will be interesting to see what the firm does to reverse its fading fortunes.