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Technology Stocks : Compaq -- Ignore unavailable to you. Want to Upgrade?

To: Chris McConnel who wrote (22282)	3/17/1998 6:14:00 PM
From: FR1	Respond to of 97611

Also in related news: Block Trade - Compaq Computer (NYSE:CPQ) 250,000 Reuters, Tuesday, March 17, 1998 at 12:53 at 23-15/16, down 1-1/2, crossed by Salomon Smith Barney

To: Chris McConnel who wrote (22282)	3/17/1998 6:15:00 PM
From: van wang	Read Replies (2) \| Respond to of 97611

32 cents...whoa....maybe I need to revise my estimates...BTW any news on FY 99 from SSB analyst...thx tommorrow shapes to be a down day for tech...now we are getting the bearish momentum going someone told me that the market is the tide...the industry/sector is the wave and the company itself is the ripple...this I believe unless you own KO a decade ago

To: Chris McConnel who wrote (22282)	3/18/1998 12:56:00 AM
From: ed	Read Replies (1) \| Respond to of 97611

Those analysts can not even estimate the earning of this quarter, how can they estimate the earning of three quarters ahead, with accuracy. I have always felt curious that how can CPQ's CFO know the earning of the 1st Q of 98 when there was still one month left before the quarter is closed. Now I know why they know this quarter will break even one month before the quarter end. CPQ can write wha ever inventory in the channel against its operational earning of this quarter, so CPQ's managers know it will breakeven one month in advance. Example , if at the end of the quarter, CPQ ends up with $400 MM in operational profit, but have 200k units in inventory, lets assume the cost of each unit of business model is $1000, then the cost of the total inventory is $200 MM, so you just write off those cost of inventory against your current earning, then your earning after the write off is $ 200 MM for this quarter, and the cost of the inventory after the write off is $0. So, the inventory of the first quarter is just pure profit for the second quarter, which is $200 MM if we assume CPQ dump those inventory to the market with the price set at its cost level in the second quarter. To say it in another word, CPQ just move part of its operational profit of first quarter to the second quarter through the write off of its first quarter's inventory against its first quarter's operational earning , which also means we will see a good earning report in the second quarter, because part of the operational earning of the first quarter is moved to the second quarter with this accounting skill. That is why CPQ's manager can magically predict a break even quarter one month in advance.