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

To: Elwood P. Dowd who wrote (33886)	10/6/1998 10:47:00 AM
From: rudedog	Read Replies (2) \| Respond to of 97611

El - discussed this with a CPQ marketing guy. He had not heard anything specific but he did say that as CPQ drove internal inventory down and also removed price protection, that they had been more exposed to mix problems. For example, Xeon chips were in short supply and demand was very high. CPQ had a good deal with Intel in Xeon (they had cut a deal which guaranteed certain volumes, and when yields were low, this gave CPQ a bigger share of the chips). Apparently, some big customers had double and even triple ordered some Xeon systems (by placing the same order with several of the channel partners) and when their order got filled they cancelled the orders with the other suppliers. This left CPQ with more Xeons than they had orders for. Given the new smaller inventory this was a short term problem. But this is the kind of thing that will turn up as the troops start to work in the new environment. A year ago CPQ would not even have seen a problem like that for months, now they see it in a week since the channel depth is so shallow.