Is Compaq Starting A Pc Price War?

HEY, BUDDY: WANT A HOT personal computer, real cheap? Talk to Compaq Computer. On Aug. 16, it slashed desktop PC prices by up to 25%, in a move clearly aimed at Hewlett-Packard and Packard Bell, which have gained share rapidly in corporate and consumer markets. While the cuts partly reflect inventory-clearing, they set an aggressive precedent for Compaq's new consumer line, due next month. Senior Vice-President Ross Cooley says lower manufacturing costs and booming sales of high-margin servers will offset most of the impact on gross margins. Still, Wall Street loathes anything that smells of a price war. It knocked a half-point off the company's shares, which fell to 535/8.

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