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

To: Chuzzlewit who wrote (56431)	4/9/1999 9:10:00 PM
From: Key West	Read Replies (1) \| Respond to of 97611

Chuzzlewit, If Dell gets hit on Monday, it will be a great buying opportunity. I am sure you agree with Kumar that Compaq's problems are company specific. In any case it is becoming increasingly clear that Compaq is losing market share to Dell, not the other way around as Pfeiffer would have us believe. Gene

To: Chuzzlewit who wrote (56431)	4/9/1999 9:29:00 PM
From: jim kelley	Read Replies (1) \| Respond to of 97611

CTC, They could have set up a system to review channel inventory daily or weekly to determine if there was too much inventory. Instead they do big batch builds and then look for some channel to store the inventory until it is sold. It is truly stupid in these days of highly evolved logistics and manufacturing techniques. Unfortunately, there is an immediate reward for this behavior a bookable non-sell-through order. So I can not find any reason to defend this as anything other than "channel stuffing". Regards, Jim Kelley

To: Chuzzlewit who wrote (56431)	4/9/1999 11:12:00 PM
From: Tom K.	Read Replies (3) \| Respond to of 97611

we call it channel stuffing, but it really isn't. Chuz... The game is simple but tough to spot. Works like this... when you need sales, you cajole your channel to take product. You do this through a number of techniques... bigger discounts, closeouts, even threats. The dishonest even know that it can be covered through the returns process (like a shell game). The point is, once shipped, it is current revenue. The good company then works like hell to help the channel get it out their door. If it doesn't move, the channel gets full. The following period, offering bigger price breaks let you convince the channel to take even more.... but now margins begin to suffer. Finally the channel is full, the product gets obsolete, inventory drops in value and the whole thing crumbles. This process has been around for quite a while and is quite easy to hide from the outside. Takes in-depth analysis of ships into vs. ships out of the channel to uncover the practice.... unless of course you abuse it to prop up current sales and then it crumbles.... then it's too late and it becomes known as channel stuffing. Tom