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Technology Stocks : Dell Technologies Inc. -- Ignore unavailable to you. Want to Upgrade?

To: exhon2004 who wrote (120384)	4/23/1999 10:18:00 PM
From: Ian@SI	Respond to of 176388

smithbarneyresearch.com ... Compaq ascribed the shortfall in commercial desktop/notebook revenue to 1) softer than expected market demand and 2) heightened price competition in large U.S. accounts. We believe that Compaq's failure to keep pace with competitors' (IBM, Dell) improvements in components inventory turns and channel inventories left the company cost-disadvantaged. Compaq either lost some business to competitors in 1Q or was forced to cut prices more quickly than expected...perhaps both. ... And Rosen thinks he's got the right strategy. See this extract... ----------------------------------------------------------------------- Asset Management Metrics Actual Expected Prior Qtr ----------------------------------------------------------------------- Inventory Turns 13.7 16 15.5 Days Sales Outstanding 68 60 53 Days of Payables 54 48 46 Cash Conversion Cycle 41 35 31 ----------------------------------------------------------------------- These balance sheet metrics place Compaq at a significant PC cost disadvantage versus both direct and indirect competitors. Dell and IBM are turning internal inventories 60-75X per year, and HWP is somewhere between Compaq and Dell/IBM. MAXIMIZING COMPONENTS INVENTORY TURNS IS THE SINGLE MOST IMPORTANT FACTOR IN COST COMPETITIVE PC MANUFACTURING. It is therefore no wonder than Compaq was not able to price aggressively during the quarter without sacrificing significant gross margin. ...