In the wake of the evil suicide attacks on the United States, the high technology sector has rallied to provide, with few exceptions, uninterrupted communication services for citizens, workers, government and law enforcement. As the survivors of the World Trade Center attack in New York City go back to work, they will need computers, monitors, telephones and other high-tech office equipment to continue doing their jobs with the efficiency they had prior to the terrorist Òinterruption.Ó

The casualties at both the WTC site in New York City and the Pentagon in Washington, DC have shown a need for blood donations and other relief efforts. When the need arose, organizations like the Red Cross, churches and citizens responded immediately with what was required and then some. Even Dracula gave blood, as Palestinian leader Yasser Arafat gave blood to aid the WTC attack victims (note to the Red Cross: Check and double-check that guyÕs blood)! General Electric, Yahoo and other firms have pledged monetary support for the New York firefighters and terror victimsÕ families. However, as of Thursday September 13, 2001, none of the major PC OEMs or office supplies retail chains have offered to donate their wares to aid the businesses in the WTC.

There is a case that could be made against donating the massive amounts of office and computer equipment to the corporations who lost everything in the attack. One very good reason not to is that many of the companies with offices in the WTC towers will have insurance claims that would cover the cost of new equipment. I hope there would be little debate about acts of terrorism being covered by the companiesÕ insurance policies. Some insurance claims adjusters may claim that a terrorist attack is the same as an act of God (the insurance companies might try and say it is an Òact of AllahÓ), but the court of public opinion would readily convict and summarily incarcerate those people.

Another good reason not to donate phones and computers to the displaced WTC office workers is the fact that American businesses are capitalist enterprises first and foremost. There is no doubt about Con EdisonÕs ability to lay down fiber optic communications and heating/lighting infrastructure into a temporary building (or the new World Trade Center office buildings whenever they are completed) for the displaced workersÕ use. The doubt is in Con EdisonÕs financial situation after giving away what would amount to hundreds of millions of US dollars on services and products that would normally generate revenue for ConEd. Unlike in socialistic nations, AmericaÕs private citizens and industries are not required to give up their source of revenue as soon as the government declares a disaster. The beauty of the capitalistic system is that those who give do so of their own free will. If ConEd can donate their services, they will do so. If they cannot because of a negative impact on their finances, so be it.

The most obvious reason is that AmericaÕs high tech sector is in a slump and has been for a year. Can embattled tech companies really afford to start giving away products gratis even in times of disaster? Companies like VA Linux, Red Hat and the other supercharged IPOs of 1999 with 500% value gains the first day were founded on the idea of Ògive away the product but charge for the service and support.Ó That is why they are now on the event horizon of the stock market black hole. Even the tech stalwarts with real business plans like Dell, Microsoft and Cisco (who have pledged sympathy and a nebulous amount of ÒsupportÓ on their home pages) cannot just give away thousands of computers, operating systems and network switches in exchange for good PR. It may look bad, but I understand their reasons. These companies need to get and keep their cash in these tougher economic times.

There is one very exceptional case for a high-tech company to give during this disaster. Hewlett-Packard and Compaq Computers merged the first week of September to form one of the largest tech companies in the world. In light of their merger and this WTC tragedy, HP-Compaq is actually in an excellent position to make a donation to help these businesses. HP-Compaq comes out ahead with a great boost to their image and possibly to their finances in the long run.

HP-Compaq has a large pre-built inventory of computer systems that were built four to seven weeks ago (depending on who you talk to) that are sitting in warehouses waiting to be shipped to retailers. Dell and Gateway have the ÒdirectÓ manufacturing model whereby the computers are built only after customers order them via the phone or Internet. Because computer sales are so slow and the product cycles are so fast (new processors and other computer components double in speed and power every six months to a year), a large inventory of two month-old computers is hard to sell. When the product cycle spits out new components, the components from a few weeks ago automatically drop 15%-30% in price. The computers HP-Compaq made two months ago are now worth 30% less. The profit margins on those systems when they were new are usually only 20% meaning that every HP-Compaq system sold will lose HP-Compaq money.

What HP-Compaq can do is donate thousands of these systems to the companies that fell victim of the terrorists at the WTC. Politically, HP-Compaq will look better than their rivals who cannot donate thousands of systems without taking a major hit in the pocketbook. Financially, HP-Compaq will have a hard time in the next couple of years during their merger transition. If they liquidate much of their inventory and hopefully write it off as a tax-deductible donation, it would benefit them financially as well. Once these companies have the computers in place, HP-Compaq can offer their services to set up all of these new systems. Once the companies are back on their feet again in year, these new customers may decide to pay for a lucrative service and support contract from their new friends at HP-Compaq. Unlike the PC hardware, service and support for that hardware has much larger profit margins and never sits idle in a warehouse.

It is doubtful that HP-Compaq will take this advice. If Carly Fiorina and Mike Capellas decide to donate their products and services, remember that you heard it here first. <>

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