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Technology Stocks : Dell Technologies Inc.
DELL 125.97-1.0%3:59 PM EST
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To: Chuzzlewit who wrote (84458)12/9/1998 8:47:00 PM
From: jim kelley  Read Replies (2) of 176387
 
CTC,

RE: CPQ Working Capital*******************************************

I was perusing the CPQ 10Q-3/98 filing, and I have a couple of comments and questions for you.

First, the CA-CL= 2.433B which is lower than I thought it was. Also, CPQ is claiming deferred income tax credit of 2.123 B
in the current assets.

Question1: Can they get this money out of Uncle SAM this quarter?
If they can not they are going to be running low on cash unless they make a loan.

Next, they are planning to layoff 19,700 employees. Through 9/30 they have laid off only 5,700 employees. They incurred $1.634 B charge for these employee layoffs. Thus, the total cost of the employee layoffs is about $ 5.6 B. Thus they will be additional charges of about $4B in the coming months.

It appears that they do not have sufficient cash to layoff the rest of the employees even if they have the legal OK to do so. Charges of this magnitude will consume about 1.5 years of CPQ profits.

Question 2: How can the analysts be showing 1.75 earning for next year when these restructuring costs and employee layoff charges are just beginning?

It looks like they can not layoff the next batch of employees until they get their tax money back from the government.

I am impressed by the the impact of CPQ stock promotion on the stock price, but I can see little justification for its current valuation.

I would appreciate your comments about CPQ's situation.

edgar-online.com

Regards,

Jim Kelley

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