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Politics : Ask Michael Burke -- Ignore unavailable to you. Want to Upgrade?

To: PaperChase who wrote (28582)	5/28/1998 5:09:00 PM
From: Earlie	Respond to of 132070

Paperchase: Thanks for nice comments. They are appreciated. Like MB, I sure got tired of beating my head against the wall this Spring as conditions in the PC/semi game went from bad to ugly, yet the stocks soared. Not that I'm complaining, as it just sets up conditions for making more dough when they tank. My gut tells me that most analysts will cave in once this quarter's warnings period gets underway. Two weeks to go. With respect to CPQ, you are dead accurate to watch, not put for a bit. Things will look acceptable for a quarter or two after the coming great DEC writedown. CPQ's management won't let this delicious opportunity go by without riding it hard. They'll write down everything in DEC that they can get away with (thus creating assets that produce but have no amortization costs), they'll write down every PC left in inventory to zero (which produces good margins when they are then sold a few weeks later), and they will clean out all skeletons in the process. Not that the problems aren't big. CPQ's management has not acted quickly to get their hands (and minds) around DEC, which is understandable, given the PC problems. Nor do I envy them the fierce competitive environment that the "service" game has become. CPQ made a mistake on this one and there will be some indigestion. Keep your eye on that smoldering class action. While I hate these legal acts of extortion under most circumstances, the boys at CPQ have got their trousers down around their ankles on this one. Multiple public utterances at all those conferences that inventories are fine, everything is on track, and then OUCH, "the breakeven from hell" occurs. Now what is this?....the execs sold a bushel full of stock just before the problems became public? Of course, just a coincidence. But what about that "factoring" of receivables just before "the problem" pops out?.....ummmm........ It won't get to court and the settlement will be big. Best, Earlie