Yes, Compaq, There Is A Santa Clausby
COMPAQ COMPUTER'S RISKY inventory gamble seems to have paid off. It made a massive bet on the holiday buying season--doubling the year-before inventory to $2.3 billion. With Compaq set to report fourth-quarter earnings on Jan. 25, word is that the company really moved the goods. Dean Witter Reynolds analyst Eugene Glazer expects earnings to be up 65%.
Demand for PCs helped a lot, and Compaq had product waiting on the shelves. Also buoying Compaq: the 1994 caution of IBM, which got burned in 1993 after making its own big inventory wager. Last year, Big Blue grossly underestimated demand for its Aptiva PC. During 1994's first nine months, Compaq seized IBM's PC market-share lead. International Data analyst Eric Lewis figures Compaq ended the year with a 10.2% share, IBM with 8.7%. Few now laugh at Compaq CEO Eckhard Pfeiffer's goal: to double his nearest competitor's share. A Compaq exec says rivals now had better follow its fat-inventory policies.
One snag: Compaq risks a mutiny by margin-squeezed distributors. And by retailers--some were miffed by pre-Thanksgiving shipment delays due to shortages of monitors.