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Technology Stocks : Compaq -- Ignore unavailable to you. Want to Upgrade?

To: Chuzzlewit who wrote (31660)	8/27/1998 2:15:00 AM
From: rudedog	Respond to of 97611

chuz - Your margin numbers are right for 1H 98- but that's because they shipped nearly half of their product out of the channel with price protection that took it down 15 points. In 97, their margins were 28% against Dell's 22.3%. CPQ squandered better than 9 points in the channel in contra-revenue and another 5-7 points in internal inventory and still their percentage earnings were on a par with Dell's. There is only one way to explain it - lower component costs. The fact that CPQ shipped so much from the channel is also why Dell's share numbers are artificially high in the last period - CPQ's real sales are nearly twice the sales-in numbers. I hope that Dell doesn't get a hangover from that cocktail in 3Q and 4Q, a lot of the analysts seem to have missed the real story and so they will see Dell share 'shrinking' when it might really be on target. not a pretty picture...