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Politics : Formerly About Advanced Micro Devices -- Ignore unavailable to you. Want to Upgrade?

To: Tenchusatsu who wrote (55209)	4/12/1999 4:26:00 AM
From: Tenchusatsu	Read Replies (2) \| Respond to of 1572904

To all those who doubted my assertion that Compaq was financing its AMD-dominated retail line with high-end machines: Take a look at the WSJ article on Compaq and its latest earnings warning: www3.techstocks.com More importantly, check out this quote: The profit woes suggest sales of big computers acquired through the acquisitions of Digital Equipment and Tandem Computers continue to fall, analysts say. Sales of the high-priced machines, which carry gross margins at least double that of PCs, aren't salvaging the PC margins drop. Compaq's product gross margin is expected to be about 22.5% for the quarter, similar to Dell and Gateway Inc., which don't offer minicomputers. This quote suggests that there was a need to offset the lowering margins of their PC line. And what else would cause the margins on their PC sales to fall, except for the sub-$1000 retail market that they helped to create? Not that there's anything wrong with falling prices for PC's, which are always great for the customer. But Compaq failed to follow up with successful cost-cutting. Instead, they tried to make up for it by swallowing Digital and Tandem and hoping that those acquisitions can provide Compaq with a strong high-end (and high-margin) market presence. As Tony Viola can tell you, it hasn't worked out the way Pfeiffer intended. Tenchusatsu