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Politics : Ask Michael Burke -- Ignore unavailable to you. Want to Upgrade?

To: Peter Singleton who wrote (44240)	1/21/1999 6:09:00 PM
From: RealMuLan	Read Replies (1) \| Respond to of 132070

According to this Whisper site, GTW whisper number 85 cents. They missed by 4 cents. So it just might well open down. earningswhispers.com

To: Peter Singleton who wrote (44240)	1/21/1999 11:28:00 PM
From: Earlie	Read Replies (3) \| Respond to of 132070

Peter: Just settling in for a couple of days of number crunching. Both IBM and GTW in one night ,....fun. A first glance at GTW's numbers has me a bit puzzled. Revenues were up from Q3 to Q4 some 27%, but COGS were up only 11%. There is plenty of pressure on component pricing, but this is 90 days we are talking about. Another way of looking at it is this: in Q3, COGs represented 89% of revenues, then fell to 78% of sales in a single quarter. Possible, but truly remarkable. Another anomaly is SG&A. During the quarter, the company opened 59 stores. That brings the total to 144 stores. So in Q4, the company adds 70% to its stores, and the SG&A actually goes down as a percentage of sales. Again, rather interesting, particularly as the advertising appeared intense. Incidentally, GTW says that they had 9.6% of the U.S. market for the year. Their total unit sales were 3.5 million for the whole world. If their percentage number is accurate, and if one subtracts an appropriate percentage for sales in Europe, and Asia, it suggests a lower total U.S. PC unit sales for the year, than we expected. Perhaps I am misinterpreting the meaning of their 9.6% With margins way up (as a % of sales), and SG&A way down (as a % of sales), the resulting numbers have to look good and they do. With sales up 17% in Q4 (Y-O-Y), accounts receivable are up 47% and accrued liabilities are up 53%. Their suppliers must be a bit grumpy. (g). Take a look at the "non-recurring expense" and how it would have impacted the bottom line if it had been a "normal expense". I also note that close to 11% of net income came from interest and other income. The company has a fair bit of latitude in how it chooses to deal with sales that result from "Your-Ware". I'd kill to get the details but they are not available, although we are trying to dig them out via the "pieces-of-puzzle" route. The company claims to have grown unit sales at twice the speed of the market, which suggests a continuing market share grab by the direct sellers from their competitors, IBM's comments sure sound like they made little progress in PCs, but we won't know until more figures are available. American unit sales up - 34.5%, but revenues up only 15.9% speaks to those falling ASPs. The European numbers are even nastier at units up 21% and revenues up 1.6%. In summary, those margins appear suspect and the SG&A numbers suggest super efficiency in opening stores. (g) Incidentally, the stores carry minimal inventory, so it wasn't a "pipe-line fill". More later. Best, Eatrlie