Elwood - the Yahoo poster should consider this;
Lets not forget that in 1997 when sales were well below what they are now, cpq made more than 1.08 per share. The 1.00+ will be met by (i) continued cost cutting, (ii) 15% increase in revenues, (iii) a return to margin growth (margins have been dropping in last year), etc. etc.
The answer, in a nutshell, is to reverse the factors which caused profits to drop on comparable sales. The single biggest factor is the increase in cost of goods sold as a percent of sales resulting from retail prices dropping faster than component costs. Retail prices appear to be stabilizing. If component costs can continue to drop and cpq can maintain retail prices, that will go a long way to solving the problem. In addition, new product introductions such as the ipaq are designed to increase market share - should be good margins on the ipaq. Low cost product with high margins which should generate increase in pc share.
Finally, I would point out that in 97 G&A costs were 3.7 billion and in 98 those costs increased to 6.3 billion!!! That is a major, major part of the problem - which is also easy to fix. Take the differential (2.6) and figure out what that amounts to on a per share basis. A ton!!
|
