Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

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

To: rudedog who wrote (53873)	3/18/1999 12:24:00 PM
From: jim kelley	Respond to of 97611

Dog, The "slim data" that you claim I am drawing my conclusions from are the quarterly reports of CPQ and its distributors and retailers for Q4. You can dispute my calculations if you wish but the methods of computing internal and external inventory are standard. Neff acknowledges "channel dislocations" rather "channel stuffing". The boys at CPQ seem to have lowered the bar to 4 weeks of target inventory from the two week target they had in Q4. So it seems a lot of word games are being played in order to accommodate CPQ's failure to perform to their own targets. I do not dispute the possibility that CPQ could have built PIII motherboard assembly inventory- but heck it is still inventory. Also, it is highly likely that PIII desktop production began shortly before INTC PIII announcement. But this does not obviate the fact that CPQ had a poor January and a slow Feb. That gives them one month to turn the corner on the quarter while product transitions are taking place and they have excess inventory of obsolete product. It is quite possible to have shortages of one type of product with a glut of another. So channel stuffing is not inconsistent with specific shortages. In fact it looks like there was a glut of Deskpro EP machines. Hence, the effort to dump them in China. But we can call that a channel dislocation rather than stuffing if you wish. It is interesting that this extremely negative news follows the most intensive propaganda campaign to pump up CPQ stock I have ever seen. That campaign started in Q3 and reached a peak in Q4 and was accompanied by large scale insider trading. Now comes the bad news. I would hate to be a CPQ investor at this time in their history. There are so many other stocks to invest in that do not have a continuing credibility problem. Regards, JK