Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

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

To: Aitch who wrote (62161)	5/27/1999 3:32:00 PM
From: Steven N	Read Replies (1) \| Respond to of 97611

Ray Lane zdnet.com sn

To: Aitch who wrote (62161)	5/27/1999 4:46:00 PM
From: rupert1	Read Replies (1) \| Respond to of 97611

Aitch: Thanks for the Mulonuvich (ML)report even though it was the usual mealy-mouth stuff. A couple of weeks ago he used a toy, home-made survey to spout off, this time he uses as his platform the opinion of an analyst, not his own opinion, mind, that the comments of one company, Circuit City, mean that a whole new paradigm is occuring. On his toy survey, he covered his backside by saying that COMPAQ offered solid long-term value: this time he says that his whole theory about declining profits may never play out! I wonder why he bothered mentioning it. Perhaps he is running a debating club! (1) Because COMPAQ has greater volume than the others and has geared itself before any of the others to produce quality at lower prices, it has state-of-the-art manufacuturing runs which allow it to enjoy cost efficiences that allow it to make profits with the lower price computers, where the others have problems: how did COMPAQ become NO. 1 in the first place? By aggressively tackling the lower priced market. I would say watch out for news that COMPAQ is becoming even more aggressive in its approach to low cost PC's and appliances: DELL, meanwhile, is said to be flirting with free PC's, hoping to make its profits from the sale of accessories or internet-related services. (2) It has been a considered part of COMPAQ's strategy for some time, to rely less on revenues from consumer PC's and rely more on high-end hardware, storage, servers and services which have much higher margins, and in these areas its revenues and profit growth is accelerating. The problem with COMPAQ's 1Q was that the merger of CPQ/DEC/Tandem which will support this trend was less advanced than thought. So there are better things to coem from the merger. (3) Even if margins on lower cost units for retail consumers are reduced it is still a money making business, not only because it yields a profit, but also because buyers of COMPAQ computers help reduce the cost of enterprise oriented PC's which, in turn stimulate users to becoconsuemrs of its high-end hardware, storage and servers and its services, buyers of its accessories and users of Alta Vista. COMPAQ has a broader range of goods and services to sell than even IBM. (4) The growth prospects in the US are questioned every year and every year the doubters are wrong. There is enormous scope for growth in 2nd and 3rd PC's per family, and in educational and other institutions, and a cluster of powerful industries from semi-conductors to software have a strong vested interest in technological developments which will accelerate obselescence and feed demand for replacement of the existing stock. Lower cost means a higher turnover for upgrading. (5) If we look at the international market, the scope for growth is immense and COMPAQ is perhaps the company best poised to take advantage, or is comparable to IBM. The specifc problem of the cost of connecting to the internet in the UK have been examined far more thoroughly on this thread than Mulonuvich managed - his comments were naive and behind the times. The situation in the UK and Europe is changing very fast, even weekly: the net cost of connection has fallen even in 1999 and developments which I have posted about suggest that there are going to be some dramatic further reductions soon. See the article from The Register I posted earlier today about how the UK is catching up with the US in computer use (in fact have a look at The Register it has stories on this issue every day - theregister.co.uk ). Watch for announcements that British telcoms will be offering the same kind of flat rate as is used in the US, or heavy discounts for internet usage, there are already some companies offering free access through an ISP and free telephone connections. That is the trend in the UK and because of standardisation in Europe it will become the trend throughout the 300 million population of the European community.