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

To: rudedog who wrote (85754)	12/16/1998 6:31:00 PM
From: jim kelley	Read Replies (2) \| Respond to of 176387

Rudedog, How are you coming up with 1B in taxable income in Q4? CPQ's total costs on 9/30 were 98.14 % leaving only 1.86% pretax profit. Note that Q3 did not suffer the huge impact of the Q2 writeoffs. It was the first quarter of combined operations and the operating costs were enormous. I get revenues of $ 9,745 M and taxable income of 200M.

To: rudedog who wrote (85754)	12/16/1998 10:11:00 PM
From: Chuzzlewit	Respond to of 176387

Rudy, there is frequently a difference between the earnings that companies report for shareholders in annual reports, and earnings used as a basis for FIT. The result is that the provision for income taxes is frequently much different from the taxes actually paid or refunded. For example, for the 9 mos. ending Sept 30, Compaq reported a provision <refund> for income taxes of <$93>MM, but the amount of the net refund from the cash flow statement is <$137>MM. Often, this is the result of simple timing differences, like accelerated depreciation. Other times it may be due to aggressive accounting procedures -- booking earnings that are not really earnings (like filling channels, but accepting back unsold merchandise). We are dealing here with a difference of $44MM. So what are the real earnings? That's why I caution you to use cash flow statements. The point I made earlier is that cash flow from operations for the 9 month period ending Sept 30 was only $700 MM (which included a tax refund of $137MM) compared to $2,800 MM for the comparable year ago period. As I said to Robbie, this doesn't include non-operational items, like all of those special charges. Nor does it include other income, or financing costs. Considering the timing of the expected special costs, that spells trouble to me. Since this is a Dell thread, I don't want to flog this one to death. Investor beware! And always watch cash. TTFN, CTC