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To: wayne nikituk who wrote (115981)	4/10/1999 1:34:00 PM
From: rvgent	Read Replies (1) \| Respond to of 176387

Jim--I dont quite understand that if Compaq is suffering margins/demand at the high end how DELL wont be affected? Also, is this quarter's shortfall at CPQ mainly due to poor execution by not having enough/too much of certain products, with poor cost control? appreciate your thoughts Compaq is operating on very thin margins.. There are posts both on the CPQ thread and out here, which show that a small drop in revenue caused a massive drop in earnings. If their revenues had dropped by approx further 3%, they wouldn't have made any earnings this quarter! Neither INTC nor DELL operate on those sort of margins thankfully.

To: wayne nikituk who wrote (115981)	4/10/1999 2:17:00 PM
From: jim kelley	Read Replies (1) \| Respond to of 176387

CPQ has a different situation than DELL. Infobeads is reporting that DELL is showing a 4% share gain in the US workplace market through March while CPQ lost a percentage point. In the large business market, DELL has opened a 10% gap on CPQ at 31%. These share movements occurred this quarter. CPQ business model is inferior to DELL's. CPQ has intrinsically much higher operating costs and is losing its cost of goods advantage over DELL. Overall, DELL's costs are much lower than CPQ's. This is the recipe for the decline of CPQ over time. CPQ has been trying to offset this trend with acquisitions and diversification of their businesses. So far the results have been disappointing. DELL is stating that it is on track to deliver against estimates this quarter, I suspect they will exceed estimates, The problem is not really demand as CPQ would have you believe but a host of other problems that are company specific and unlikely to improve. DELL has built a reputation for telling its shareholders the truth and building shareholder value. CPQ has done just the opposite. Just my opinion....