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

To: Chuzzlewit who wrote (115997)	4/10/1999 1:55:00 PM
From: rvgent	Respond to of 176387

vgent, your comment is backwards: if they were operating on thin margins a small decrease in sales would cause a small decrease in earnings. Dell operates on smaller gross margins than CPQ, yet managed to turn a nice profit last quarter with a revenue shortfall of greater magnitude (percentage wise) than CPQ's. But I think that kind of argument is irrelevant to the situation. I think the issue here is not so much gross margins as horrendous channel problems. Obsolete inventory can kill earnings in a hurry, and I think that's what happened. you are right! thanks for pointing that out. I shouldn't be doing business/financial speak. I was thinking simplistically in terms of fixed costs and anything more than fixed costs as earnings. revenue shortfall of only about 3% (300million/9700million), but a 50% drop in earnings.