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Technology Stocks : DELL Bear Thread -- Ignore unavailable to you. Want to Upgrade?

To: AlanH who wrote (925)	5/29/1998 1:24:00 PM
From: jim kelley	Read Replies (2) \| Respond to of 2578

AlanH, Re: Firesale in CPQ Desktops It is humorous that you claim that I am creating FUD when you are the bear... I took my data from the CPQ and DELL websites. To say that your data is different than mine from the same websites is ridiculous. As to CPQ cost, it is well known that what the margins are on these sales. It is published quarterly. In the past, CPQ's margins across their entire product line have peaked at about 9% after taxes. This includes their enterprise products such as servers and workstations. Thus, it is no big leap of judgment to reach the conclusion that their margins on desktops systems are probably less than half that during a good quarter. It is well known that most of CPQ's profit comes from their enterprise business. Unfortunately, this quarter and the last have not been good quarters for CPQ. Their margins for this quarter and the last on desktop systems is most likely less than 0 without the purported giveaways! CPQ's ASP erosion has been well reported and is significant in the desktop arena. This leaves no profit margin room for CPQ to give away printers and scanners and still make a profit. Thus if BH's story is correct then it must be the retailers selling at below cost. This is possible especially if they have too much inventory and can not return it. This conclusion is supported by Rudedog in the link I supplied. Rudedog has a heavy investment in CPQ and is familiar with their current situation.