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Technology Stocks : Compaq
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To: jim kelley who wrote (53687)3/18/1999 11:26:00 AM
From: rudedog  Read Replies (1) of 97611
 
Jim -
You seem to be drawing a lot of conclusions, mostly negative, from some pretty slim datapoints. Internal inventory also includes work in progress, so subassemblies and even completed units less processor for PIII could have been assembled. In fact they could have been built up in January but not shipped, since Intel leads product ahead of release to assure that volume ramp will be adequate as seen in the market.

I also question the number you have for inventory in the channel. My own research into channel positions (admittedly not very scientific) indicated that they had serious shortages of key products in December and going into January. This is not consistent with a stuffing operation.

Likewise I have direct evidence that CPQ shifted all manufacturing into high gear in mid-February. Several of my wife's friends work at CPQ in manufacturing, and they have been working overtime and extra shifts including weekend shifts since that time. If CPQ was in the situation you are describing they would not be doing that.

So I think they went into 1Q99 with a big WIP inventory but low finished goods, and a low channel position in many key products, in preparation for the PIII shift.

Once again, we will not have long to wait to get more information about results.
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