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To: Geoff Nunn who wrote (152035)	1/26/2000 9:35:00 AM
From: OLDTRADER	Read Replies (1) \| Respond to of 176387

RE:Capellas-He is probsbly just doing what Gil Amelio did--make moves-fake vision -move-twist-whatever to keep his job until the force of fact shows him to be what he is.In short keep his pay check coming in as long as possible.wbm

To: Geoff Nunn who wrote (152035)	1/26/2000 11:06:00 AM
From: rudedog	Respond to of 176387

Geoff - good questions - let me give you my take... re: Does this mean you think CPQ may soon fold its tent in the commercial PC space? No, not at all - but I think they will quit trying to out-DELL DELL and instead will change their model. A quick overview of my thoughts is in Message 12684476 Things certainly don't appear that way to me. Yesterday Capellas said CPQ wants to ramp up total sales to a 15-17% growth rate. Obviously, then, he has no intention of dumping the corporate PC unit. As you can see from my analysis, I think his plan is to shift the revenue mix, lower commercial PC ASP while improving profitability and reducing cost of goods sold, and change the role of the commercial PC unit a little. I have hardly heard the term "PC" used in any of the recent CPQ press... As you know, the corporate PC division has been losing gobs of money for years. Yesterday, the picture appeared no brighter. CPQ reported $79mil. in Q4 operating losses on corporate PCs. While it is true this isn't as bad as the $225mil operating loss reported in June, I would assume CPQ shareholders take cold comfort from that. If CPQ does as they say they will do (shift 50% of the mix to products like iPaq) that in itself will take them from a loss to net profit of about 7%, not great but good enough, especially if that part of the business becomes a much smaller part of the overall business. Consumer PC products are already in good shape, and the enterprise numbers continue to astound me - that business taken by itself is considerably bigger and more profitable than SUNW, a fact which seems to have escaped the analysts... Do you think CPQ has any realistic grounds for believing it can turn things around? Stronger than that, I think they are nearly done turning things around and are about to start showing the fruits of that work. Still, I don't expect rocket performance by CPQ in 2000 - they still have a fair amount of baggage. I am looking for a mid-40s stock price mid-year and 50s in late 2000 or early 2001.