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

To: Mohan Marette who wrote (68922)	10/3/1998 12:31:00 AM
From: Ken Beal	Read Replies (1) \| Respond to of 176387

Hi Mohan, I think you misinterpreted rudedog's sentence: That means that there were 2 CPQ units sold to customers for every 1 sold to the channel by CPQ. He never compared 2 CPQs to 1 Dell. What he said was that CPQ may have sold more machines than were reported, but the problem is if their numbers are going down then the channel isn't "pulling" as many machines through it. So regardless of how the numbers are spun, I think it looks bad for CPQ. But I could be wrong, and even so I'm not really concerned about CPQ. If you want the tallest building in a city, you either knock down all the taller buildings or you build yours higher. Michael Dell is building the tallest building in the world, and I'm very glad to have a chance to ride his coattails. Cheers, KenB

To: Mohan Marette who wrote (68922)	10/3/1998 7:32:00 AM
From: rudedog	Respond to of 176387

Mohan - So if this being the case how is that CPQ sells 2 units when DELL sells one It's not double - dipping, but it does show that Dell, because they sell direct, get the same number no matter whether we measure sales from the manufacturer or sales to the customer. If we are looking at demand, in your hypothetical example, customers wanted twice as many CPQ units as Dell units. It's just that CPQ had already made one of those units in the past. This points up the real problem, which is that the Dell units were ALL made using components at current prices, using the latest components, and using inventory that Dell had held for only hours. One of the CPQ units might have been made that way, but the other was made at some point in the past with inventory that had been held for weeks, and was current at the time but may be older now, and was then held in the channel for weeks or months, and surely has a lot more cost in it. That is the reason CPQ has been driving inventory out of the channel and reducing their 'price protection' from months to days. The reporting anomaly we are seeing only happened because of CPQ's adjustment of channel inventory in 1Q and 2Q. When the flow of products into and out of the channel was relatively constant, the manufacturing numbers were fairly representative of sales to the customer. Even then, there was some shifting of the numbers by quarter, since CPQ reported numbers in 3Q (sales to the channel) that actually should have been matched against Dell's 4Q numbers (when both Dell and CPQ products went to customers). Now that CPQ is down to 2-3 weeks in the channel, the future manufacturing numbers should be much closer to the sales to customers. Mason he could do wonders with them numbers There were some interesting things done with channel numbers in the past, for sure, but I think it backfired on CPQ big-time this year. I believe that the misunderstandings about what was really happening hurt CPQ internally as much as it hurt others. This is quite unfair to DELL since their numbers are the true numbers In my opinion the opposite is true. Dell at least has accurate numbers reported. The press and analysts actually know what is going on in the distribution chain (at least the ones I talk to) and as you say, for Dell a sale is a sale so there are no downstream surprises. The knife cuts both ways for CPQ. They get credit when they sell to the channel, but they don't get credit when the channel sells to the customer.