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

To: Kenya AA who wrote (37300)	11/24/1998 9:37:00 AM
From: rudedog	Read Replies (1) \| Respond to of 97611

K - Do they have some kind of bad track record other than the fiasco last Feb.? Not that I know of, CPQ had a good relationship with WS prior to that. Mason made a huge mistake IMO but only his last few statements were in any sense misleading. CPQ was off by a few weeks in 'fessing up' about their inventory problems in 1Q. Many will argue that CPQ mislead people simply because the channel strategy allowed them to 'play with the numbers' but that was just the way CPQ had done business almost from its founding. Even in late '97 most people in the company believed that they had plenty of time to convert, and that the BTO strategy introduced in early '97 would allow them to reduce channel inventory gradually. My personal gripe is not a few weeks' lag in providing guidance to WS, but the failure of CPQ management in late '96 and '97 to take stronger action to solve their distribution problems. Ross Cooley had a big hand in that - he was very powerful in the company and owed a lot to the channel. But EP did take strong and direct action to go after the problem - Cooley was eased out and Dick Snyder was hired from Dell because he supposedly understood how to make a more direct model work. Snyder lasted only about 8 months, then he also walked the plank. Next was the combination of Roel Pieper (WW sales) and Jim Schraith (NA Sales) who were actually at the helm for the second half of '97 when the real damage was done. EP bagged both of those gentlemen in the first week of 1998, right about the time that the earliest financial and sales numbers would have been available. A really savvy observer might have taken that as evidence that EP had seen something that he REALLY didn't like in those numbers, but I did not, and few others read it that way either. EP probably didn't want to blow the DEC acquisition with an announcement that his top sales guy and the head of NA sales and marketing had blown it. But something a little less rosy should have come out in late January or early February to reset the street's expectations.