To Thread;
I'm just full of good news today. Frankly, I'm just getting real pissed with all the bull shit I fell for. Shame on me. I absolutely detest getting conned. I should never have listened to all the bullshit about what a great company cpq was. And I emphasize - WAS.
Here's a little tid bit about Best Buy. Note how they have reduced their inventory of computers because of the crappy margins. You can bet this scenario is being repeated with other retailers. Why do you think cpq was happy to sign up Radio Shack. That's right. Their traditional retail channel lis shrinking. Anyway here's the portion of the article relating to Best Buy:
"With expansion slowed, Best Buy was better able to address the troubles of existing locations, such as inventory management. "They took a hard look at their inventory and re-evaluated what they wanted to carry," says Beth Richard of Everen Securities. "They found out that there was a lot that they could trim." Perhaps most notably, Best Buy has eliminated about a third of its selection of compact discs and personal computers.
Reduced inventories have meant lower inventory costs and less risk -- Best Buy is now less likely to face a repeat of their $15 million write-off in 1996 for obsolete PCs. The move also allowed Best Buy to improve its relationship with the suppliers it continued to use, and it freed up more floor space for lucrative product lines such as digital cellular phones, major appliances, books and even exercise equipment. All offer the retailer fatter margins than PCs and CDs.
And Best Buy has returned to the product that offers the greatest profit margin to consumer-electronics retailers: the extended-service plan. Best Buy had shunned service plans since the late 1980s in an effort to move away from the high-sales-pressure environment that characterizes many consumer-electronics chains. Best Buy still avoids the hard sell, but now at least offers the lucrative extended-service plans to customers. "
I have posted this before. The current price war will be the kiss of death for somebody. CPQ is no stronger to withstand this war than ibm or hwp or dell. It's a crap shoot. And something tells me that ibm will be a survivor. I have also previously posted that the current environment is similar to that which existed in 1991. It is deja vu. And as I have mentioned numerous times. CPQ stock took three years!!! That's right - three years before it reached its previous high of $5.00 in 1991. CPQ didn't see $5.00 again until early 1994!!!
The sad and difficult thing is I have got to get over the psychological barrier of (i) do I take a loss now or (ii) do I sit here and rot for for a long period of time until this whole mess shakes out. That's the question. Neither option turns me on for obvious reasons.
for those of you who do not own cpq, I believe you have lots of time. The stock is dead in the water until this damn war is over (a war I might add caused primarily by ibm and cpq). Go buy some coke (ko) (Warren Buffet didn't recently reduce his holdings of KO) and visit cpq in a year from now. Also, if you need a computer go down to Best Buy - I hear they're selling them on best offer basis. |
