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Technology Stocks : Dell Technologies Inc.

DELL 133.78

-0.1%

Nov 14 3:59 PM EST

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To: JRI who wrote (105528)	2/27/1999 2:26:00 AM
From: jim kelley	Read Replies (2) of 176387

John, You are right there was no way that CPQ was going to report a 20 cent quarter. In my estimate I was using the 26% tax rate from Q3 instead of the 18.6% tax rate of Q4. I also assumed service revenues to be the same and product margins to improve by a percent or 2. The tax rate assumption was too high and the revenue number turned out to be too low. Otherwise the SG&A was deadon. What made CPQ numbers work was channel stuffing that increased the revenues do to product by between 10 and 20% percent. This is only 2 to 3 weeks of stuff. This is really easy to do for CPQ. So do not take the CPQ number of 20 cents too seriously when dealing with a silly putty financial statement. If CPQ's Q4 was restated without the channel stuff, I estimate a 26 cents a share in real earning. Their hardware business is not significantly profitable. Most of the profit is coming from the service business. Regards, Jim Kelley

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