Richie -
CPQ did well, as did the sector - this should be good news for everyone. CPQ's quarter over quarter numbers reflect the fact that in 3Q97, CPQ stuffed the channel, so sales that didn't really occur until 1Q or 2Q '98 were booked in 3Q and 4Q '97. We will see this effect in 4Q also.
The disclaimers at the bottom of the report talk about this but do not give adjustments (which are hard to figure anyway) but a rough swag would be 50% of the excess units in the channel were shipped in 3Q and 4Q 97. This amounts to almost a million units excess, or 500,000 units per quarter, which would imply that CPQ's real 3Q97 numbers were 2300, and growth was 35% year over year, which is good.
WW share was also mis-stated in 3Q97, since with 2300 units instead of 2827, CPQ would have had 11.6% WW, not the 14.2% recorded last year. This implies a share gain of about 2.1%, about the same as Dell's share gain. Dell's unit gain was the same in absolute numbers as CPQ's, but coming from a much smaller base, represents a larger percentage gain.
The underlying message is that the rich get richer - Dell and CPQ are gaining share at the expense of IBM and HP. CPQ is still paying (in the press) for the channel stuffing, and will for at least another quarter. We will see the reverse effect in 1Q and 2Q 99 - CPQ numbers will look better than they really are since they will be compared to the artificially depressed 1Q and 2Q 98 numbers.
Many of the better analysts are aware of this and are discussing it. I expect that general guidance will be quite positive for both CPQ and Dell. |
