I am pleased to send you the May report - has a lot of positive news and
progress despite the challenges in the overall market. Look forward to
seeing you at the next Board meeting.

Regards,
Peter

>  -----Original Message-----
> From: 	Executive VP, Sales & Services - Peter Blackmore
> Sent:	Friday, May 25, 2001 7:53 AM
> Subject:	May Blackmore Report
>
>  [Compaq Confidential - Internal Use Only]
>
> To: Compaq Global Sales & Services team
>
> I'd like to start this month's report with a warm welcome to the 800
> employees of Compaq Financial Services, who "officially" joined the Sales
> and Services team on April 30. I say official, because they've been a
> valued partner with us since the group's founding in 1997, offering
> customers financing and asset management services around the globe. For
> example, you'll see many wins throughout this report that include CFS
> solutions. Earlier this month, I enjoyed meeting the CFS world
> headquarters team in Murray Hill, N.J., and hope to meet many others as I
> travel to the countries. Our continued focus as one team will be to
> present "one face to the customer" as we strengthen our alignment and
> drive even greater value for our customers.
>
> While the market continues to be a real challenge for not only Compaq, but
> for everyone in the industry, it's important that we stay focused on our
> objectives, yet recognize where we are winning. Customer acceptance of our
> technology and solutions continues to be high - note the long list of wins
> this month and our improved marks for customer satisfaction. We have a
> strong global balance, and we're creating unbelievable solutions for
> customers. We're seeing strong front log growth of services, which is a
> real differentiator for us and continues to be the lead element in many of
> our largest wins.
>
> Compaq is taking some tough actions such as the restructuring and reducing
> inventories - steps that will position us for leadership when the market
> rebounds. And we're seeing that same strategy with many of our major
> customers.
>
> Recent studies by Morgan Stanley, Tower Group, Giga and IDC confirm that
> major financial institutions see this as a time to make investments in the
> "right thing" and come out of the economic downturn in a dominant
> position. The December IDC poll of 75 major commercial banks concludes
> that Compaq is ranked No. 1 in the industry in Business Problem Assessment
> and Technology Selection - beating IBM, HP, Oracle and Microsoft. Our
> North America Financial Markets group has been making long-term
> investments in Wholesale Payments Systems, Retail Banking Systems, Capital
> Market Solutions, ZLE for Finance and Wireless for Finance. For more
> information, see
> http://inline.compaq.com/na/indsolu/americas/industries/finance/index.asp
>
> I know that by staying focused on our customers and doing the right thing
> for Compaq during this challenging time, we will continue to win the
> endorsement of our customers and partners.
>
>
> Our largest wins this month
> *	Asea Brown Boveri (ABB) (Switzerland) - Renewed a three-year, $60M
> contract naming Compaq as its sole Microsoft reseller. The global B2B
> supplier in the areas of manufacturing, consumer, utilities, oil and gas,
> and financial services, overall, does $100M a year in business with Compaq
> throughout more than 100 countries.
> *	America Online - Three-year, $150M contract as the preferred
> provider of high-end computing products, including parental control
> servers, Web-caching servers, login system, mailbox infrastructure and
> voice portal. The contract includes $22M in financing from CFS for the
> U.K. and Germany.
> *	JC Penney - Topped Dell for a $15M per year ProLiant server contract
> after being named JC Penney's primary supplier of industry-standard
> servers
> *	Kent School District (Washington) - Beat Dell for a $20M win for
> ProLiant servers, AlphaServer systems, iPAQ PCs, Deskpro PCs and Armada
> notebooks
> *	LANL - $25M for AlphaServer systems
> *	Marconi - $20M for ERP hosting and platform
> *	NTL (U.K.) - $17.5M for a next-generation infrastructure to supply,
> build and manage an enterprise virtual call center. The deal also includes
> ProLiant servers and Professional Services
> *	NYMEX (New York Mercantile Exchange) - Three-year deal that could be
> worth as much as $20M for AlphaServer systems running OpenVMS
> *	Starbucks - Compaq and Starbucks Coffee Co. announced a five-year,
> $100 million deal earlier this month in which we will equip the coffee
> shop chain with wireless Internet access.
> http://inline.compaq.com/news/newscpq/cool/Starbucks.asp
> *	Toys R Us - Beat Dell for a $20M contract for ProLiant servers,
> desktops, AlphaServer systems and services
> *	Xerox - $35M for WS8000 systems, displacing Dell
>
>
> Be sure to read about all the sales wins in this month's Sales Wins Around
> the World report. http://inline.compaq.com/wwss/wins/worldwins.asp
>
>
> Great strides in customer satisfaction
> On May 21, Technology Business Research (TBR) released its Q1 2001
> Customer Satisfaction Report focused on Intel-based servers, desktops and
> notebooks. The study is based on interviews that were conducted Jan.-April
> this year with IS/IT professionals and purchasing managers of 515 large
> U.S. companies (1000+ employees). TBR reported that Compaq achieved
> ratings increases in all categories - servers, desktops and notebooks -
> the only major player (Dell, IBM, HP) to do so.
> *	ProLiant servers once again led the industry-standard server market
> in customer satisfaction.
> *	Compaq moved from 4th place to 2nd place in desktops
> *	Compaq satisfaction in notebooks improved slightly and we are now
> rated #2
>
> The study notes that, "A striking aspect of this quarter's analysis is the
> great distance at which Compaq has exceeded the competition for parts
> availability, scalability, server management, and overall hardware
> reliability" and in the consistency of its customers' satisfaction from
> quarter to quarter "while its competitors continue to show vulnerability
> to eroding customer satisfaction for the second consecutive quarter."
>
> For more details, see
> http://inline.compaq.com/strategy/message/Frontline/custsatisfaction.asp
>
>
> Compaq among the most innovative wireless companies
> Unstrung has named Compaq to its annual list of the "Top 25 Most
> Innovative Wireless Companies," our first time to make the list. The
> editors evaluated more than 1,500 companies, placing Compaq in the top
> 1.6% of innovative wireless companies. Unstrung emphasized our breadth of
> wireless offerings.
> http://inline.compaq.com/news/newscpq/cool/unstrung.asp
>
>
> Quality Supplier Award from USPS
> For the fourth time in five years, Compaq has been recognized as a U.S.
> Postal Service Quality Supplier Award winner in the Large Manufacturing
> category. The honor recognizes the effort by a large Compaq team to
> consistently deliver on a commitment to customer satisfaction.
> http://inline.compaq.com/news/newscpq/partners/postal.asp
>
>
> Four firsts at Best-Of-Breed Awards ceremony
> The sixth annual ComputerWeek Best-Of-Breed Awards reaffirmed Compaq's
> reputation for innovation. We earned first-place awards in the Enterprise
> Storage Hardware, Server, Desktop Computer and Notebook categories as well
> as second place in both the Backup Storage Hardware and Handheld & PDA
> categories.
>
>
> Compaq reaches 1M Exchange 2000 seats
> Compaq has surpassed another major milestone in providing complete
> Microsoft solutions, becoming the first partner to reach one million
> Exchange 2000 Seats under contract.
> http://inline.compaq.com/news/newscpq/partners/microsoft1million.asp
>
>
> New TV ads debut
> Earlier this month, Compaq debuted new, hard-hitting TV advertising in the
> U.S. that sets Compaq apart as an enterprise computing company.  The
> advertising, which can be viewed at an Employee Communications site on
> Inline, http://inline.compaq.com/hr/eecomm/serv/latestad.asp is the next
> phase in a brand effort that kicked off in September, and includes a TV,
> print and interactive campaign that will run in 27 countries.
> http://inline.compaq.com/news/newscpq/marketing/NEWADS.asp
>
>
> iPAQ Pocket PC receives Best of Show
> Great news from CERF 2001, a premier IT fair in Romania, where our iPAQ
> Pocket PC won the event's more prestigious prize, "Best of Show CERF 2001
> Romania." Romania Prime Minister Adrian Nastase attended the show,
> spending nearly 20 minutes in the Compaq booths where he used one of our
> PCs to surf the Web.
>
>
> Congratulations to newly certified Black Belts
> Congratulations to Carolyn Cricenti, Michel Duchesne, Bob Dufresne, Ryan
> Johnson, Naoyuki Kitami, Delia Matrecano, David McDougall, Robert Millsom,
> Thomas Peter, Nico Schutte, Johann Starrenburg, Kathy Thomas, Ren?
> Versteeg and Hans Weenik for receiving their Black Belt Certifications.
> Certification recognizes these professionals for demonstrating a high
> level of aptitude for Black Belt knowledge and skills. The process
> improvement teams that they supported have made a significant contribution
> to achieving organizational improvement goals and increasing customer
> satisfaction. http://inline.compaq.com/news/newscpq/qcs/blackbelt5-10.asp
>
>
> EMEA CS Channels Marketing and Sales
> In terms of dollars, these marketing activities in some of our smaller
> EMEA countries may not have the largest impact, but they do provide a
> tremendous boost to the business locally. They also highlight excellent
> examples of best practices that can be leveraged by other countries.
> *	Portugal - CarePaq Outbound Telemarketing Campaign - A trial program
> involving a dedicated local Call Centre agent contacting 800 pre-screened
> warranty-only customers approaching the end of the first year of warranty
> resulted in the sale of 129 new CarePaqs (17% conversion). Plans are to
> roll out this program in other EMEA countries.
> *	Finland - Electronic CarePaq Growth - Three-fourths of all CarePaq
> sales in Finland are now in the form of electronic CarePaq sales. A May
> Day advertising campaign in national press featuring eCarePaq alongside
> hardware resulted in 600 new eCarePaq sales equating to an incremental
> CarePaq attachment rate increase of 5%. As other EMEA Countries mirror
> Finland's leadership position on eCarePaq penetration, similar campaigns
> are planned.
> *	South Africa - iPAQ CarePaq Bundle - To provide further competitive
> differentiation and to improve customer satisfaction, CS Channels
> Management in South Africa has agreed to bundle a one-year Advance
> Exchange CarePaq on iPAQ handhelds, which is forecast to improve CarePaq
> revenue by $270K or 25% for the year.
> *	Spain - Presario Bundle - To drive customer satisfaction and loyalty
> and to provide a unique differentiator in the marketplace, Spain will
> bundle a 2-year, pick-up and return, five-business-day CarePaq on all
> Presario portable sales. Initially, 6,500 are planned to ship in May, with
> a total of 17,000 units in 2001. This will generate incremental CarePaq
> revenue of nearly $700K and add approximately 10% to the annualized
> CarePaq attachment rate.
>
>
> 	IBM's acquisition of Informix - Compaq's position and field advice
> On April 24, IBM announced its intention to purchase Informix Software.
> Compaq and Informix have had a long relationship in the database market,
> and have many mutual customers that have implemented mission-critical
> applications based on Compaq/Informix data management solutions.
> Naturally, many of these accounts are concerned about IBM and Informix's
> long-term commitment to supporting Informix products on Compaq platforms.
> For more information on Compaq's position on the merger, see
> http://inline.compaq.com/na/salesdashboard/communiques/Partnership/downloa
> d/informix.doc.
>
>
> Compaq now No. 1 PC maker in Malaysia
> Compaq surpassed Acer last year to become the top PC vendor in Malaysia,
> according to an IDC study. Acer had held the crown from 1992 to 1999,
> prior to last year, when we recorded market share of 10.2 percent,
> compared to Acer's 8.2 percent. Dell was third at 7.6 percent, followed by
> HP (5.4 percent) and IBM (4.5 percent).  We led in desktops with 9 percent
> market share and were second to Toshiba in portables with 17 percent
> share.
>
>
> Business Development Group 1Q highlights
> The Business Development Group (BDG) is the EMEA organization responsible
> for developing Compaq business in 98 countries. Its focus is on both
> developed as well as emerging markets in EMEA. In Q1, the BDG team
> achieved its fourth consecutive quarter of double-digit revenue growth in
> U.S. dollars.
> *	$403M in revenue, up 18% in local currency (11% in U.S. dollars)
> year over year
> *	$111M gross margin, up 27.6% from 1Q 2000, up $9.8M
> *	Achieved target of $35.2M in operating expenses
> *	Operating profit contributed $74.2M to EMEA's bottom line,
> representing 18.4% of BDG's revenue
> *	Most countries showed double-digit growth, led by Russia (87%),
> Romania (56%), Greece (33%), Czech Republic (21%), South Africa (18%) and
> MDG (17%)
>
>
> China Technical Information Center Web site
> Greater China has developed a new Web site - China Technical Information
> Center - for its sales and pre-sales employees. The site is easy to use
> and secure, providing a Chinese-based information-sharing platform that
> consists of proposal, product, technology and solution information,
> success stories and practical skill information.
> http://ctic.bej.dec.com/CTIC/index.asp
>
>
> Compaq Global Services highlights
> *	Join the North America Virtual Presenter training event - "The
> Compaq PC Utility Solution - Your Competitive Weapon" - to learn more
> about selling Global Services and Compaq Financial Services as value-added
> desktop solutions for customers. The training is June 12 at 10 a.m. and 2
> p.m. EDT. Go to http://vp.mro.cpqcorp.net  to log on and participate.
> *	"Wireless - the Art of the Possible," is the next in the series of
> Professional Services Thought Leadership Customer TeleSeminars. Martin
> Reynolds, group vice president at Gartner Group, will define the wireless
> revolution and describe how companies are using wireless in business
> applications.  Go to http://ps.inet.cpqcorp.net/sm/t_leadership/ to learn
> more and please invite your customer!
> *	The Association for Information and Image Management (AIIM) has
> awarded Roberto Rivera the prestigious designation of Master of
> Information Technology. AIIM is the global industry association connecting
> users and suppliers of information management technologies. Nearly 30,000
> professionals from all over the world attended the AIIM 2001 Conference
> and Exposition in New York City, where the award was presented. Roberto is
> a senior solution architect and the technology manager for Professional
> Services' Latin America & Caribbean (LAC) region. He is the first Compaq
> employee to receive this designation, which recognizes exemplary
> professional achievements, including numerous successful electronic
> content management solutions that Roberto architected for Compaq clients.
> *	For the fourth consecutive year, Novell named Compaq North America
> Customer Services (NACS) winner of its prestigious Service Excellence
> Award.
> *	North America Customer Services recently announced the sale of its
> One Millionth CarePaq! Congratulations and thank you went to resellers and
> partners who contributed towards this volume achievement and this great
> services accomplishment.
> *	Hong Kong Customer Services opened a new service center in the heart
> of Tsim Sha Tsui, a major commercial and shopping district of Hong Kong.
> The Center provides value-added services to end users, Small Office and
> Home Office (SOHO) users and small businesses.
> *	In July, a Compaq Services Center will open just south of Taiwan -
> in Kaohsiung. The center will provide better support to the area and move
> us a step closer to our Taiwanese customers.
>
>
> North America e-Commerce and CRM highlights
> *	On May 1, Salomon Smith Barney made a transition from GBL extranet
> to CGBX e-Procurement, operating under CommerceOne Hosted Buy Site with
> the assistance of the worldwide e-Commerce organization.
> *	Marketmile is yet another SMB Digital Marketplace (DMP) brought live
> this month. Marketmile has a dedicated 500-person sales force being given
> incentives to drive business through the Marketmile site. Compaq will
> receive strategic placement on the site, with all new business being
> pushed to Compaq.
> *	A new U.S. privacy statement was enacted May 4 on Compaq.com to
> inform visitors about the types of information gathered online, how Compaq
> uses that information, whether we disclose it to anyone and the choices
> visitors have about their information.
>
>
> Global Alliances news
> *	Commerce One - Compaq had a big presence at the Commerce One eLink
> event in New Orleans, including panel participation, collateral and a
> booth. Commerce One announced that its hosting partnership with Intel
> Online Services would run exclusively on Compaq servers.
> *	SAP - In Q1, we delivered a 45% increase over the same quarter 2000
> in new installations, which represented nearly $290M in revenue - holding
> onto our number one market share position. Compaq EMEA led the way,
> producing 50.3% of all new SAP Windows 2000-based installations in the
> region and 11.7% of all new SAP RISC UNIX installations in the region.
>
>
> Compaq Financial Services highlights
> CFS has introduced GlobalEdge, an industry-first suite of offerings that
> enables multinational businesses to streamline the way they access and
> manage IT investments.
> http://www.compaq.com/financialservices/globalaccounts.html
>
>
> Sales and Services Venture Group opportunities
> Congratulations to the field sales force for brining these opportunities
> to the attention of the Sales and Services Ventures Group:
> *	ICICI - This is the first Compaq equity investment in India. We
> invested $4 million in a private e-commerce venture, which is part of a
> large local bank. ICICI converted from Sun to Compaq, as we won preferred
> provider status within ICICI group. This investment provides Compaq the
> opportunity to penetrate a premier banking and financial services account
> in India.
> *	QICK, plc. - Invested $1.45 million (half in products) in a
> subscription-based, online membership community, providing PCs and
> Internet access targeted at consumers and affinity programs in the UK.
>
> Gray Market compliance training
> More than 8,000 field employees have taken the Gray Market Compliance
> training. The Cross Border Office has received numerous e-mails and phone
> calls with information that is helping us combat the gray marketing of our
> products. Report any evidence of gray marketing to your manager and the
> mailto:crossborderoffice@compaq.com
>
> Recent reviews of partners include:
> *	The first review of a U.S. Enterprise partner, Avnet Inc., resulted
> in an equitable reimbursement to Compaq and also identified weaknesses in
> our systems that are being corrected.
> *	In Asia Pacific, the review of channel partner Tech Pacific
> uncovered gray market transactions.
> *	This quarter, the Partner Review program is focusing on another U.S.
> enterprise partner. Several partner reviews in EMEA will take place later
> this year.
>
>
> ABG headlines
> *	Results from the Home and Office Access 4Q00 WAVE customer
> satisfaction survey show that we're closing the "sat-gap" with our
> customers in the Desktop segment - with 78% top two box scores ("very
> satisfied" or "completely satisfied") vs. Dell 81%, HP 68% and Gateway
> 59%. We had a 14% year-over-year increase as compared to 0% for Dell, -5%
> for HP, and -13% for Gateway.
> *	Presario portable PCs remain No. 1 in U.S. retail sales with 34%
> market share, according to March 2001 NPD Intelect. Presario has held the
> leadership position since September 1998.
> *	Compaq EMEA increased its total desktops market share to 15%,
> extending its share lead to 5.4 points over No. 2 Fujitsu-Siemens,
> according to IDC 1Q01 results.
> *	Our Microportable Projector team set a new record in March, shipping
> more than twice the number of projectors as its previous best month. We
> now hold the No. 3 spot in the N.A. microportable market with 17% share.
> *	Autodesk, Inc., a provider of design software and digital content
> creation tools, will provide 2,500 iPAQ Pocket PCs to its worldwide sales
> force and channel partners.
>
> Awards & Reviews
> *	The 2001 Industrial Design Excellence Awards bestowed a Gold Award
> for Design Excellence for the MP2800 Microprojector.
> *	The Presario 7000Z received an Editor's Choice Award from CNET,
> which referred to the 7000Z as "digital dynamite, " proclaiming "this
> desktop is as fast, vast and pretty as a system can be."
> *	The iPAQ Music Center was featured in reviews in the June issue of
> FamilyPC ("Internet Radios: The Next Wave") and the May issue of Sound &
> Vision ("Multimedia Maven").
> *	The iPAQ Pocket PC H3650, named "Best in Show" in the June issue of
> Mobile Computing Magazine, is also featured on the magazine cover.
> *	In an article titled, "PDA Wars: Round 2," Time magazine said this
> about the 64MB iPAQ Pocket PC H3670: "Power users can tap oodles of data
> with this silver gem."
> *	Desktop Engineering gave a sparkling review of the Compaq TFT5005
> monitor, saying, "Everything about the TFT5005 was perfect."
>
>
> Business Critical Server Group news
> *	The N.A. High Performance Servers (HPS), NonStop and Telco
> organizations have merged into one Business Critical Server Group under
> the leadership of Scott Bowman.
> *	Channels HPS has launched a new partner recruiting program with
> dedicated resources focused on attracting new Direct VARs, targeted HPS
> Compaq Authorized Enterprise Resellers (CAERs) and creation of selling
> alliances with key ISVs/consultants and our existing CAERs and enterprise
> partners.
>
> Tru64 AlphaServer Unix headlines
> *	Compaq installs the world's most powerful commercial supercomputer
> and biggest server farm to support protein research.
> http://www.geneprot.com/scripts/press/press_archives_page_e.asp?id=46&act=
> valide&item=press
> *	The AlphaServer ES40 system has established a new performance record
> for mid-range servers in the SAP Business Information Warehouse Version
> 2.0 B benchmark. http://biz.yahoo.com/prnews/010422/dasu002.html
>
> NonStop headlines
> *	WebServer Online magazine recognized our NonStop Himalaya systems
> supporting the Rockliff MailSite, writing, "With the Himalaya's notorious
> scalability backing it up, MailSite could soon be responsible for 'tens of
> millions of mailboxes.'" http://webserver.cpg.com/news/6.5/n4.shtml
> *	A recent CNET article highlights the Zero Latency Enterprise (ZLE)
> architecture:  "ZLE and the servers play into Compaq's strength of massive
> scalability and fault tolerance as well as its presence in the
> mission-critical environments of top blue-chip accounts."
> 	 http://news.cnet.com/news/0-1003-201-5890435-0.html
>
> OpenVMS headlines
> *	IBM announced a significant reinvestment in OpenVMS with the
> availability of its new middleware product, MQSeries V5.1, which runs on
> the AlphaServer/OpenVMS platform.
> *	OpenVMS business grew by 26 percent year-to-year in Asia Pacific,
> according to an IDC study.
>
>
> ISSG headlines
> *	Compaq again captured the No. 1 position in worldwide in sales of
> industry-standard servers in the first quarter of 2001, controlling more
> than one quarter of the global market and shipping 60,000 more units than
> second-place Dell and twice as many as IBM, according to the latest
> figures from research firm Dataquest.
> http://inline.compaq.com/news/newscpq/industry/Serverlead.asp
> *	The ProLiant DL360 was named best Network Server of the Year by
> Network Magazine in its May 2001 issue.
> http://www.networkmagazine.com/article/NMG20010413S0005
> *	Compaq will use Intel low-voltage processors in our innovative,
> hyper-dense server architecture to lower power consumption while
> increasing density and enhancing performance in forthcoming front-end
> servers. http://inline.compaq.com/news/newscpq/industry/Quickblade.asp
>
>
> IMC tools keep getting better
> The Product Bulletin/QuickSpecs Web site and CD-ROM from Worldwide
> Integrated Marketing Communications (IMC) continue to improve. New
> features on the site include North America product photos, flyers and
> archived QuickSpecs, dating back to 1997, while the 2Q CD has improved
> search and download features.
> http://www.compaq.com/products/quickspecs/QuickSpecs_Archives/QuickSpecs_A
> rchives.html
>
>
> 'Shop-floor' kiosks to deliver benefits information
> Compaq and Benefitfocus.com earlier this month announced a partnership to
> deliver touch-screen kiosk technology to the employee benefits
> marketplace. The partnership will use Compaq hardware, support and
> services as the platform for delivering the Benefitfocus Internet and
> kiosk-based benefits enrollment and communication application.
> http://www.benefitfocus.com/compq_bf.html
>
> Many thanks for your efforts this month. Let's continue "winning in the
> streets" to turn in a strong quarter two!
>
> Regards,
> Peter