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To: The Phoenix who wrote (28293)10/14/2000 12:11:14 PM
From: IceShark  Read Replies (1) of 436258
 
I'm no longer messing with GTW, so haven't been digging into it, but I do think Fleck is probably on to something here. There are three issues that trouble me. One is the CFO's background with Boston Chicken. There is no question Boston tried, tried? heck they did, to hide from investors that they were going down the tubes. Two and three are intertwined and concern financing of box sales and the yourware program, or whatever they call it.

Financing is a big deal but you really should look at it the same as any other credit card pool. And value it accordingly like a credit card pool (not card issuing company) and not apply the valuations of a blazing PC company. And the accounting assumptions regarding this can provide a field day to someone that wants to fudge the numbers for a while. Which would make me real nervous in light of the CFO.

I also would like to know the accounting details behind the yourware program as one could stuff quite a few cookies in there to be drawn out when things ain't going so hot. I also wonder if this program might produce some sort of customer backlash when they figure out how it really works. i.e. the box they have been paying all these monthly payments on is basically worthless on trade in. And this also relates back to financing since, unlike most car financing, the deal is way underwater the day it is signed - the used box isn't worth much but the consumer owes a pile on the note. If times get hard defaults go up and there is no way for GTW to salvage an asset out of the mess.

So I would be careful for those reasons. Then there is the issue of this hybrid sales model they are cranking up. I don't know how that will finally work out. But there is a retail store operation that isn't really a retail store, not a direct seller of PCs. GTW clearly has a cost disadvantage compared to DELL or MUEI and whether the benefits outweigh the costs only GTW knows.
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