Compaq Message Board - Msg: 3240320

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Technology Stocks : Compaq

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To: Evan Stern who wrote (14685)	1/23/1998 10:55:00 AM
From: hpeace	Read Replies (2) of 97611

evan, channel inventory is 5 weeks. please explain given this is the formula for cpq revenue. rev= sales - accrusals for immediate returns - sales promotions planned - all inventory in a channel over plan - price protection. - all contingincies that are reasonable and legal if this is cpq revenue formula and I wrote the program so I know.. may of changed alittle but the thenme is the same. please explain how for every $ you ship a channel line that is over plan it is substrated out of the revenue..please expalin how stuffing raises cpq's reenue?????????? can you do this for me. the 400 dealers are being ask to stk more inventory bec. cpq is cutting dealers from 1000's to 100's. my guess is cpq even took a negative to reveunue for planned returns bec. dealers are massively being phased out. anyway...answer the question???? thanks ..just do the math as a pc goes to a channel that is over plan, then the revenue is added to the sales in the equation and substracted out in the formula that looks at the channel and how much it's over plan. besides, 12 months ago cpq had 100% more shannel inventory. this is infered in the conf. call. and cpq's internal inventory is turning 50% faster. this is in the release. the revenue was not missed. it's just an accounting funnny money deal. they answered that question. you sell a pc in korea to a custmoer. you book it at 1 million WON(1000 WON to $). now when you collect the 1 million WON it converts back to dollars at (1500 to 1$). so cpq collect $667 instead of the 1000 it was sold at. so, revenue is lower. BUT, CPQ MAKES THE SAME PROFIT SINCE THEY INDICATED THEY HEDGE THE CURRENCIES. SO THEY LOST $333 IN THE PC BUT GAINED $333 IN CURRENCY HEDGING MINUES THE COST OF HEDGEING. SO, PROFIT IS HIGHER OR THE SAME. REVENUE IS LOWER BEC. OF ACCTING FUNNY MONEY STUFF. this is why rev. was alittle lower and profit was higher than expected. doesn't mean weak sales. now if they didn't hedge currency, cpq loses out big time.but that will not happen. cpq hires the brightest and best to plan all this out and pay them well...they impressed me for a decade working with them.

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