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

To: Key West who wrote (56408)	4/9/1999 8:58:00 PM
From: Chuzzlewit	Read Replies (3) \| Respond to of 97611

Gene, we call it channel stuffing, but it really isn't. The worst sin you can commit is to run out of inventory. So you put plenty of inventory into the channel, and when there is no sell-through it kills you in the next quarter. That means that you see a big drop from Q4 to Q1. It really hurts companies like CPQ when that also corresponds with a product transition because then you are stuck with obsolete inventory. So Compaq got hit with a double whammy. Compaq needs to figure out a way to compete with Dell's direct model. And they can't simply copy Dell without taking a huge hit from existing resellers and VARs. Until they come up with a viable strategy they will continue to have problems in generating profits and losing market share. That's why I invest in Dell TTFN, CTC

To: Key West who wrote (56408)	4/9/1999 9:15:00 PM
From: jim kelley	Respond to of 97611

Gene, Thanks for the support. CPQ is a very interesting but dysfunctional company. It needs to find a good 12 step program for its management. CPQ has the real problem of modifying its business models to make them competitive in the world. Unfortunately, it has manufactured some additional problems by lying to its shareholders to the analysts and I suspect to itself. I personally would not invest in CPQ until I was convinced its fundamental and dysfunctional problems were being satisfactorily addressed. However, to answer your question, I think that CPQ could go below 20 next week. CPQ is still hiding some huge problem. Otherwise, they would have called a conference and given a more complete explanation. Management is dysfunctional. I would rather play the rebound in the good PC stocks. I do not expect CPQ to show a strong recovery in Q2. I think their problem this year is worse than last year. This is what they are hiding IMO. INTC reports Tuesday and their CC should clear up the nature of CPQ's distress relative to the other PC makers. Regards, Jim Kelley