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To: Chuzzlewit who wrote (49326)	6/30/1998 7:36:00 AM
From: Geoff Nunn	Respond to of 176387

Chuz, Your explanation of CPQ's growth rampage last yr sounds reasonable to me. You could also mention that CPQ makes extensive use of mgt stock options. That being the case it is far fetched mgt would embark on a strategy knowing it would weaken the share price. BTW, I didn't mean to suggest CPQ went on its expansion binge for the purpose of fragmenting the shareholder base. I merely sought to point out that this would be a favorable byproduct. Therefore, I don't feel it is correct I accused the mgt of "perfidy." You make a good point about the sub zeros cannibalizing CPQ's more profitable product lines. Any proper financial analysis of the viability of CPQ's new plants should make an adjustment for this. BTW, what is the reason for suggesting no equity financing was used? Geoff HOUSTON TX P.S. thanks for the tip about the old Cuban restaurants in Tampa. We're moving to Tampa.

To: Chuzzlewit who wrote (49326)	7/1/1998 11:17:00 AM
From: rudedog	Read Replies (1) \| Respond to of 176387

Chuz - That's the arrogance of large, entrenched management. I think you are exactly right here. Especially in North America, the top management had developed the channel-stuffing strategy (which allowed them to 'make the numbers' independent of the real sales performance), the 'shelf space' strategy (and the more I dig into that, the more I understand how easy it would be to make things look a lot rosier than they are) and the 'high volume' sub-1K strategy. As you say these were all high risk long term, since they mask the real performance of the company and delay or change the feedback that managers need to stay in touch with customers. The huge turmoil in the North American sales division, where basically the top 3 layers of management are completely different than they were at the end of 1997, indicates the displeasure of top management with the 'old guard' approach. We'll see if they have the energy to root out the old practices.