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

To: William F. Wager, Jr. who wrote (105384)	2/26/1999 2:25:00 PM
From: Chuzzlewit	Read Replies (2) \| Respond to of 176387

Bill, In looking at the historic data I have come to the conclusion that Compaq's numbers were, and always will be inflated in Q4. The reason is fairly simple if you think about it. Much of the Q4 sales bounce is in Christmas sales, and since Compaq uses channels to supply inventory to purchasers there must always be more inventory in the channels than the company expects to sell, because the worst thing to happen to a seasonal business is to run out of merchandise during the hot season. But the problem comes into play because the sales data reflect the movement of inventory into the channel, not out of the channel. That has two major implications for Dell shareholders: First, it means that channel suppliers like Compaq always overstate their Q4 sales. Second, it means that CPQ's market share "gain" is even more of an illusion because it does not factor in the inventory that the channel is stuck with. This means that CPQ's sales are artificially low during Q1. As far as I'm concerned, unless sell through numbers are somehow provided by IDC and Dataquest, Q4 and Q1 numbers for channel suppliers are highly suspect. TTFN, CTC