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Technology Stocks : Dell Technologies Inc. -- Ignore unavailable to you. Want to Upgrade?

To: rudedog who wrote (38289)	4/18/1998 11:58:00 AM
From: Chuzzlewit	Read Replies (1) \| Respond to of 176387

Rudedog, this kind of analysis begs the question, because we don't know the level of the buybacks from the channels, nor do we know the level of inventory write-downs that will be taken in future periods that have to do with Compaq's problems this period. Compaq's earnings were at about break-even this quarter because of recognition of costs incurred in previous periods. This problem does not exist for Dell, because it's business model virtually guarantees that revenues and expenses will be matched. But when you contrast that to Compaq you see some major differences, like LIFO and FIFO inventory accounting issues. TTFN, CTC

To: rudedog who wrote (38289)	4/19/1998 2:20:00 PM
From: jim kelley	Read Replies (2) \| Respond to of 176387

Dog, This should thicken the ice I'm skating on. IMO, it is better to look at net profit because of the fluctuations in CPQ's other costs. Here is what I get: Q3-97 6474 562 Q4-97 7323 667 Q1-98 5687 16 Q2-98 5700* 0 Total Revenue= 25,184 Total Net Income= 1,245 Net Profit Margin= 4.9% They reported 9.1% net profit margin for Q4-97 based on virtual sales (A.K.A. channel stuffing). Thus, their profits are really 53% lower than they reported. Incidently their reported gross margins gapped down to 18% from the 27% in the previous quarter. Could this be due to the impact of the Sub-zero? * estimated revenue To be sure CPQ is still a power house but they are in a decline. I have not analyzed DEC yet but even a cursory glance at their financials suggests that this merger is not going to help CPQ profit margins or inventory turns. I made money on CPQ last year as a short term play but the conduct of their management does not leave me with a good feeling about the future of this company.