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To: jim kelley who wrote (40684)	5/6/1998 8:50:00 PM
From: Mohan Marette	Read Replies (1) \| Respond to of 176387

Jim: Thanks a lot for the in depth info on CPQ.Looks like another snow job by EK-Mason duo. A lot of talk and little to show for it.

To: jim kelley who wrote (40684)	5/6/1998 10:28:00 PM
From: rudedog	Read Replies (2) \| Respond to of 176387

The eagerly awaited return of Mr. Kelly! Jim, I was looking for a little more hard data to support your position. I have talked to people at Ingram, Vanstar, and MicroAge. They have plenty to say about CPQ but inventory bloat is not one of the hot topics. What they told me pretty much squares with what mason said about channel inventory heading to a 3-4 week position by the end of June. And BTW according to them most of the 'Old' stuff is already gone, being replaced by newer products, and apparently several new product launches in the next month. The big complaint I heard is that the price protection is going away rapidly, but has not been replaced by the 'new deal' in terms of cash flow, they are nervous that the old insurance will be gone if they get sick. These guys claim that they WANT the old incentives to take additional inventory because that's the model everyone understands but they can't get them any more. They are not as sure about how to make money under ODM. So I guess CPQ still is having some problems sorting out relations with the channel, but from all I can gather the inventory is responding to treatment. If you have any evidence from the channel which indicates differently I would like to know it. Several on this thread and elsewhere vouch for you so I would give serious consideration to any information you can provide. Regards - the rude one

To: jim kelley who wrote (40684)	5/7/1998 3:37:00 AM
From: jim kelley	Read Replies (4) \| Respond to of 176387

Dog, Addendum to Inventory Bloat If you take a look at the revenue reported in Q1-98, you will note that it is higher than the revenue reported in Q4-97. The management statements were made in March 1998 to the effect that the channels were unable to sell the inventory as expected. So there was excess inventory exiting Q4-97 and that was compounded by selling even more to the channels in Q1-98. The result was severely reduced profitability which will continue for at least another quarter. I think it is time to look at the financial statements of Vanstar, Ingram, and the other channel dealers for inventory levels. Now we hear CPQ management saying that they never expect their server margins to return to the levels of Q1-98. CPQ is in serious trouble IMO. What will they be saying next?