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

To: rupert1 who wrote (59599)	4/23/1999 4:02:00 AM
From: rupert1	Respond to of 97611

Contextual stuff about Intel - no mention of COMPQ. April 23, 1999 Intel Sees Revenue Rising in Future From Internet, Networking Ventures By DEAN TAKAHASHI Staff Reporter of THE WALL STREET JOURNAL NEW YORK -- Touting its place in the fast-growing Internet economy, Intel Corp. told analysts that new Internet services and networking ventures could generate billions of dollars in new revenue in a few years. Craig Barrett, chief executive officer of the Santa Clara, Calif., chip company, said Intel is taking advantage of the rapid growth of electronic commerce to position itself as the "building-block supplier to the Internet economy." But in contrast to Intel's role as a chip maker, the building blocks will consist of hardware and software. Company Profile: Intel Andrew S. Grove, Intel's chairman, said at the biannual analyst meeting that Intel's new businesses present opportunities similar to past upheavals such as data processing in the 1970s and low-cost commodity manufacturing in the 1980s. "In this industry, it is like the duck that looks calm on the surface and is paddling like heck underneath the surface," he said. "An enormous re-engineering of business is going on below the water line." Mr. Barrett said the company's networking business has been growing about 50% a year and should top $1 billion given the pending acquisition of Level One Communications Corp. He said that business could grow to several times that size in a few years thanks to new initiatives in chips and systems that will tie together data and voice networks. And Gerhard Parker, a longtime manufacturing executive who was appointed to head Intel's new business ventures last year, unveiled the company's plan to create a major data-services business known as Internet hosting. Intel will set up data centers with thousands of powerful computers known as servers to provide data processing, storage and other computing services for companies that connect users to the Internet. Each center will cost $50 million to $100 million and use 2,000 to 5,500 servers. Intel itself will not become an Internet service provider, but it will provide outsourcing services to those companies. Mr. Parker said the new venture sprouted from Intel's relationships with companies like Excite Inc. and will likely bring it into competition with a diverse range of companies, from International Business Machines Corp. to Electronic Data Systems Inc. "It is a big opportunity, but I am not sure what advantage Intel has over everyone else who wants to be in this business," said David Wu, an analyst at ABN/Amro in San Francisco. "But it says a lot when Intel puts someone as senior as Gerry Parker into that position." Intel can get serious about investing in new Internet businesses because of the windfall from its microprocessors, which accounted for 80% of revenue last year and all of the profit. Mr. Parker said Intel started its own internal venture-capital fund, which will spend $50 million in 1999, to finance new businesses proposed by employees. Intel also said electronic commerce is catching on quicker than anyone expected. Its own e-commerce revenue is at $1 billion a month and could hit $15 billion, or half of revenue, in 1999, according to Sean Maloney, senior vice president of sales and marketing. Mr. Maloney said that in two or three years about 90% of Intel's revenue will come from e-commerce. In other new business, Intel has begun to embrace information appliances, or devices smaller than PCs that connect to the Internet. Intel said it would introduce two new StrongArm microprocessors next month, which would serve as the brains of information appliances such as handheld computers and TV set-top boxes. In its core microprocessor business, Intel also has a variety of new products in the works. Paul Otellini, executive vice president, said the company will launch a 466-megahertz Celeron microprocessor on Monday for the low end of the market. He also said that Intel's portable chips would soon match the performance of its chips for desktop computers. Mr. Barrett said that Intel has begun shifting to lower-cost 0.18 micron manufacturing, which will help it deliver lower-cost microprocessors with speeds reaching 600 megahertz in the second half of 1999 and 700 megahertz in the first half of 2000. The first 0.18 micron Pentium II mobile chips will go on sale later this quarter, putting Intel ahead of competitors. Most descriptions of the new businesses came after the close of markets. In trading on the Nasdaq Stock Market Thursday, Intel's stock rose $3.0623, or 5.2%, to $61.50.

To: rupert1 who wrote (59599)	4/23/1999 4:07:00 AM
From: rupert1	Respond to of 97611

WSJ Commentary on COMPAQ A good read, very thoughtful. April 23, 1999 Commentary Business on Internet Time By John Browning and Spencer Reiss, who edit The New Economy Watch, a monthly report for investors published by the Gilder Group. For dramatic evidence of the speed of change in the Internet economy, have a look at Compaq Computer Corp.'s Web site. Last Sunday, CEO Eckhard Pfeiffer was shown the boardroom door, in large part for being too slow to shift to direct sales of personal computers via the Internet. Click on the Compaq site on Monday and--presto!--no more Mr. Pfeiffer. Instead there was a letter from Compaq chairman Ben Rosen announcing the search for a new CEO who would ensure that the world's largest PC seller regained "the organizational flexibility necessary to move at Internet speed." All CEOs should ponder Mr. Pfeiffer's fate. First and foremost they should be asking how their own business needs to change, and how fast, in response to the Internet. Second, they should think about whether they need to make specific changes or promote the ability to change per se. The two are very different--maybe more than Mr. Rosen realizes. The sin that brought about Mr. Pfeiffer's downfall was one that a lot of people used to consider a virtue: On his seven-year watch, Compaq built the best retail-distribution network in the computer industry. Understandably, he was loath to abandon his prodigal achievement, and the people who made it work so well. But he was wrong not to. For the Internet really has changed the rules of distribution, especially in the computer industry. Even the best retail network may no longer be good enough. To see why, compare Compaq with its home-state Texas rival, Dell. Its founder, Michael Dell, went into direct sales--first by telephone, later over the Internet--in large part because he did not think he could compete with Compaq on retail distribution. Now the chip, so to speak, is on the other shoulder. Direct sales enable Dell to work fast and light. It has less inventory. It has built stronger and deeper relationships with customers. It routinely does most things far more quickly than Compaq, from taking and filling orders to introducing new products. Compaq desperately needs to come up to Dell's speed, and so do a lot of other companies. The Web is transforming how people sell things in a host of industries. Air tickets, office supplies, building materials, books and a raft of other products meet the basic criteria for effective Web distribution. They can be comfortably purchased without being seen or touched. They are not hard to pick, pack and deliver. And often they require a lot of collateral information that mere salesmen may not be able to remember or deliver. Embracing direct sales will be one of the toughest challenges facing tomorrow's CEOs. This week also saw the unceremonious dumping--after just five months on the job--of CEO Philip Pfeffer at Borders Group, the No. 2 U.S. bookseller, which is clinging to a bricks-and-mortar strategy and falling even further behind both archrival Barnes & Noble--now an aggressive e-convert--and trend leader Amazon.com. But even corporate leaders who do take the plunge should pause to think about what the shift to a business environment dominated by electronic networks demands: a single dramatic leap, or a constant, accelerating process of change. In many industries, business on the Internet will likely settle into its own routines--dramatically different and faster than today's, but eventually predictable. But those in industries undergoing rapid technological or regulatory change, those in information industries and those whose job it is to mediate between a fast-changing supply chain and fast-changing customers will not just have to accelerate their pace, but to transform their entire way of governing themselves. This means that even very successful companies may need to become smaller and more focused--if necessary by spinning off profitable and complementary businesses (and subcontracting them back in). They will also need to encourage unprecedented mobility of management, moving executives into and out of jobs in quick rotation to bring specialized skills to bear when they are needed. One of the ironies of start-ups is that even in the tech world, companies celebrate their success by enshrining their business models. Compaq celebrated the triumph of personal computers over minicomputers and mainframes by buying Digital Equipment and Tandem. It gained a full-service product line, and all of the time-consuming problems of coordination and scale that go with it. Compaq is far from the only company that has celebrated success by acquisition. Amazon.com, Yahoo! and most every other Internet firm with two share certificates to rub together have been busily buying up other firms--and none of them are getting any quicker or nimbler in the process. That is the core dilemma of growth and success in Internet markets. You can be big or fast, but probably not both. And heaven help you if you're the wrong one at the wrong time.

To: rupert1 who wrote (59599)	4/23/1999 4:10:00 AM
From: rupert1	Respond to of 97611

This sounds good. From WSJ. Ad Notes . . . COMPAQ STUNNER: Compaq Computer Corp. is reevaluating its marketing budget in the wake of a shakeup in its executive suite. Compaq's vice president for world-wide advertising, Andrew Salzman, said the huge computer maker is "consolidating our advertising funds in order to support a very aggressive effort behind our recently announced nonstop e-business strategy." Compaq hasn't decided how to rechannel its ad budget, he said, but it expects to use "innovative guerilla-marketing tactics" on the Web, and there could be heavy television advertising only at certain times of year. "Anything that is not driving our message home or driving sales here and now is out," Mr. Salzman said. Compaq spent more than $150 million on advertising in 1998, according to Competitive Media Reporting. Sunday Compaq ousted Chief Executive Eckhard Pfeiffer. Chief Financial Officer Earl Mason resigned. The company recently issued a profit warning that upset Wall Street. The lead ad agency is Omnicom Group's DDB Needham.