Compaq Message Board - Msg: 9272177

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Technology Stocks : Compaq

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To: rupert1 who wrote (60308)	5/2/1999 1:35:00 PM
From: Loki	Read Replies (1) of 97611

victor...Are we doing this? Looking for explanations it is human nature to try to find answers simply by focusing on one source of the problem. We consider driving forces to be homogeneous. They are not. Thus, we can assume that the CPQ Q1 Est. "shortfall" was also for a variety of factors each contributing to the present situation. High SGA is a contributing factor among: 1. SGA higher than expected....1998 8-K report states CPQ will reduce SGA in 1999. They did not in Q1 99. 2. Pricing pressure of consumer PC's 3. IBM strong quarter indicates possible lost business by DEC to IBM? 4. Analyst's estimates too optimistic 5. Poor guidance to WS by CPQ mngmt. 6. Tax rates? 98 vs 99 ??? SGA Comparison (#'s in mil) yr qr...REV....SGA...%SGA 97 Q2...5405...670...12.3% 97 Q3...6474...788...12.1% 97 Q4...7323...850...11.6% 98 Q1...5687...785...13.8% 98 Q2...5372..1051...19.6% 98 Q3...8791..1581...17.9% 98 Q4..10859..1561...14.4% 99 Q1...9419..1477...15.7% (Consolidated statement in 98 Q3...CPQ expensed 1 bil for DEC layoffs in 1998) Loki

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