Compaq Message Board - Msg: 7454298

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Technology Stocks : Compaq

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To: rudedog who wrote (44852)	1/24/1999 2:00:00 PM
From: jim kelley	Read Replies (2) of 97611

Dog, Nice try..... In your role as apologist for CPQ you have gone way overboard in your interpretation of my position. Let me help you out since you seem to be struggling. 1) It is necessary that CPQ's cost structure improve greatly for them to make their EPS number regardless of their revenue. Their profit margin was 1.8% in Q3. It takes a mighty effort to get that to a normal profit margin. 2) Have they been stuffing channels? Perhaps, there is some evidence to that effect. However, it is inconclusive. 3) The merger with DEC did in fact reduce CPQ's working capital. My final conclusion was that they had sufficient lines of credit to permit them to write the severance checks and checks for plant closures. Now you have stated that they reduced costs: "with more than 9,000 layoffs prior to November, and closure of a number of facilities." How do you know this information? What is the source of it? My purpose here is not to stimulate ad hominem arguments but rather get the facts out on the table for discussion. You have admitted that CPQ's financial statements are opaque. I agree.

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