Tippet:
A few weeks ago, CPQ and the various players in the channel were at war. Why? Two reasons.
CPQ is now selling through the channel, through resellers and "direct". As you can well imagine, both the channel players and the resellers are less than enchanted with the addition of the direct approach.
As well, as it did last year, CPQ massively "stuffed" the channel at year end. Now, the wholesalers are wading through the boxes chest deep, and this in an unusually "quiet" quarter.
To solve the problem, CPQ suggested that it would "take control of " all inventory in the channel. I mentioned it in a note of a few days ago. Note that CPQ also stated that it would "provide additional incentives" to the channel players.
Effectively what has happened is a minor rebellion. Think of this as the channel saying to CPQ "this is your stuff, so stuff it."
To mask the problem, CPQ's spin doctors have come up with the "co-located PC assembly lines" nonsense. Those "co-located assembly lines" represent a few people who stuff a few components into the mother board before screwing each into a PC chassis.
Later, we'll hear about a big "one-time-only" restructuring charge in which all this inventory will be written down or off. The problem is that CPQ would have to restate their numbers for Q4 if they had to actually bring that stuff back into the plants. After last year's debacle the company does not dare expose itself to that. Recall as well that a big class action suit is already bubbling, and this would REALLY stir things up.
These guys are the ultimate liars. They just can't provide a straight-up story if their lives depended on it. Words fail to convey my contempt for them.
I've alerted certain folk in the press as to what is going on.
Best, Earlie |
