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Technology Stocks : Dell Technologies Inc.

DELL 122.70

+0.2%

Nov 18 3:59 PM EST

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To: Dennis who wrote (116028)	4/10/1999 3:33:00 PM
From: Chuzzlewit	Read Replies (2) of 176387

Yes, and that was the point I was alluding to. You see, CPQ routinely pushes a lot of inventory into the hands of resellers and retailers in anticipation of Q4 retail sales. Whenever the inventory moves into the channel CPQ treats it as a sale (whether it finds its way into the hands of the ultimate consumer or not). That means that CPQ's sales are inevitably overstated in Q4 and understated in the following Q1. In Q1 machines that didn't sell through are regurgitated and CPQ needs to figure out what to do with them. That leads to lots of accounting reversals. And then, being caught in the product transition (PII to PIII) makes it worse because they now have to drop the price of the machine. Second, CPQ's claim could be substantiated only if they neglect to take into account seasonal factors. That was the basis of a long debate I has with Michael Burke on this thread a couple of months ago. I feel the news has vindicated me on both points. Compaq is a sinking ship. TTFN, CTC

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