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

To: SecularBull who wrote (54729)	7/28/1998 1:32:00 PM
From: rudedog	Read Replies (1) \| Respond to of 176387

LoD - I would think that shipments are more reliable to track, and if you pay attention to margins quarter to quarter In the bad old days (say any time up to 1998) this is exactly the smoke and mirrors game that made it impossible to see what was really happening, even for CPQ executives. The 'margins quarter to quarter' included a contra-revenue charge which was a bogey against future adjustments, so the margins and COGS were easily manipulated by adjusting contra reserves. With contra-revenues representing more than 50% of GM, it was anybody's guess what was really happening. As we saw in 1H98, the impact from a poor decision in mid-1997 could easily still be playing out a year later. The only sensible way to get a grip on the real numbers is to shift to sales out tracking, maintain price protection (and thus contra-revenue) at a low enough level (say a week or 2) so that it is relatively insignificant in overall financials, and drive the sales out numbers back to production costs. This is the change CPQ is going through now. The goal is to get the numbers tied to real market conditions with a delay of at most, weeks. Dell of course can probably pull the numbers to within hours, but CPQ will never get that close as long as they have indirect distribution.