This will be Lesson No. 1 in a series on this great opportunity for all shareholders of both CPQ and HWP.
Let's go over the basics of each major player in IT.
CPQ has tremendous diversity and is finally executing an 18 month strategy to reduce cost complexity and increase profit. It matches up very well with DELL, HWP, SUN and IBM. But each of these companies has their strenghts also.
DELL great execution at the low end. The ANALysts keep touting DELL, major major FLAW in their ANALysis. Look, this company got started in a college dorm. There is no difference today. Just find the lowest f...kn prices from Asia and slap them together and distribute by cutting out the middleman Brilliant! However, this is no different than RCA, Admiral, Zenith, Westinghouse, Emerson, Quasar, etc, commodity low cost and no where to go but DOWN in margin. Why because entrepreneurs from China, Korea, Malaysia and Taiwan will eventually come and claim the market you pioneered. It is a piece of cake to copy the DELL model. Nobody has that is why they are successful! Yeah it is inertia.
HWP great breadth history and talent. But again CPQ matches them every step of the way. Did you look at the numbers for HWP yeahh!!! they make all their money from selling printer SUPPLIES. Ouch, that is unbelievable but true. Ripley's is now investigating.
SUN again a lot of strength because of the proprietary nature of the product, price performance is fantastic. BUT, they are running out of gas and will eventually be rolled over by the combined investment of MS, Intel and CPQ+HWP and IBM.
IBM the class act and this is the company that CPQ and HWP need to strive to emulate. Not DELL. Great product range and IT consulting services.
Well, where does this bring us?
If IBM =$125/share then surely CPQ+HWp=$50/share
Why? because the Global 2000 needs more IT support it is the bedrock of the modern global enterprise. Plenty of room and money for both.
Again be careful of the many ANALysts and their A-hole ANALysis. They believe that CPQ and HWP cannot make a great company, again these guys are 30 something idiots with no perspective. I leave it to Carly and Capellas and they will get the job done!
Stop thinking the merger will not work IT WILL and start thinking about how the merger has to move forward so that it becomes one of the great IT companies globally along with IBM. A company that will prosper and so will its shareholders.
Big money flow from the mutuals by the middle of this week into HWP and CPQ, see ya later.
Some of what you say is true, but believe me, Dell's model is not a "piece of cake" to copy. Four days of inventory. Build to order model. No inventory risk. Get cash from customers before you give cash to vendors. Very sophisticated pricing tools. The Wall Street Journal had an article on their pricing tools earlier this year. And they are constantly improving on their model. It's not easy to copy, particularly if today you are in a build to stock model and working through distributors. Several companies have been trying for years to copy Dell, but it has a big lead.
Sun's current problems are a result of their past success. Virtually all dot coms bought sun servers. Many went bankrupt. There is a hugh secondary market in sun equipment. Its still being bought, instead of new sun gear. It doesn't matter what sun's new product line looks like, until the secondary market dries up, no one is buying new sun gear, but lots are buying old sun gear.
2nd SUN issue: Itanium. Sun has no itanium, no linux etc. If and its a big if, itanium becomes a viable processor, sun will have a world class box out within 6 months. Remember, they went from a washed up workstation vendor to the owner of internet server sales in less than a year. They are fast like ninja warriors.
I only say this as I've competed against them for the last 15 years.