To All, A few comments on the Compaq joke. 1. I apologize to Dell. Compared to Compaq, they were pikers on the receivables scam. CPQ had revenues up $6.59 billion year over year. But receivables were up $4.107 billion. That is up nearly 27% on revenues but up a whopping 142% on the receivables. This helped cash disappear at a 36% annual rate. About as fake a revenue increase as I've ever seen.
2. Inventories were up 27%, in line with revenues. In other words, if you didn't look at the silly receivables number, CPQ's inventories might actually look manageable. If you do look at receivables, it seems there is a lot of crap in inventory at CPQ.
3. Accrued restructuring costs? Isn't this one of those things the SEC is currently investigating. Heck, it was only $1.11 billion at Compaq. If we have any accountants out there, help. When does this hit the income statement, if ever?
4. How did they reduce income taxes so much but still claimed flat eps?
5. Service revenues, the make-believe kind like IBM has, are becoming a bigger part of Compaq's revenues and by far the most important "growth" factor. Is this called "Skip to My Lou-Houston?"
6. Anyone notice that they had this great year where they lost $1.71 a share? <G> And one flat quarter, phony as it is, means the stock deserves a new all time high? Don't think so.
7. Shares have gone up despite a zillion buybacks.
Basically, it looks like Compaq was having a rotten quarter until they decided to stuff the channel and told the distributors they could pay for the junk whenever they wanted. The receivables, huge as they were, did not dent inventory buildup. Services will be the catch-all for any growth at this co while growth in the traditional products hit the skids. Services growth was 1,249% this quarter vs. 4Q last year. Boy, is that good. <G> Yes, it has to do with taking over DEC, but DEC never saw growth like that. And, of course, income taxes will be managed aggressively and suspiciously. Other than that, great quarter.
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