Purely on a technical note....there are gaps which have not been filled from July..... and if there is a whiff of margin impact in spite of bullish sales growth a fall beneath the 200 day moving average would not be out of the realm of imagination or out of line should other parts of the technology sector fall prey to the woes of 3com (networking) and (seg, wdc, qntm, rdrt) storage, etc....whether those woes be real or imagined. The absolute certainty re: the future of CPQ and the appreciation of its stock price on this thread....is SO incredibily absolute..... it borders on becoming a contrarian indicator if indeed it isn't one already. Should there be a bear market cycle (not proven yet) it would be even less likey that a premium would be accorded to a company in a primarily commodity based business...... Parts of the food chain have clearly been affected from head assemblies for disk drives through to a variety of other components and I don't believe (going forward) that continuing demands won't be made against final pricing by both the public and corporate customers. Some margin elements will be protected and improved short term using the direct sales model and ultimately the elmimation of some channel layers in the process (made mainly possible by the growth of the internet) of disintermediation....but once gone, and with better inventory and build to suit programs already in place, it's hard to see where real cost savings will be found other than layoffs and other such restructuring....which too have limits and do not grow margins as a result of sales gains but grow them finitely through internal changes to which there are definitive limits. The present story is a great one.... it's the future that appears somewhat murky and dangerous, and if nothing else, should be a cause of some small element, namely concern....though it won't be found on this thread.
Joel |
