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To: Chuzzlewit who wrote (125519)5/17/1999 3:34:00 PM
From: rudedog  Read Replies (1) | Respond to of 176387
 
EP had lost the ability to drive the company and EM, from his first days in 1996, had driven the company by the book instead of by its internal vision and direction. It was increasingly obvious to me over the last 2 years that they were not getting CPQ where it needed to go. There was never a good reason for a world-wide sales and marketing job - this just placed the field one more step away from executive leadership. So elimination of that position was an advantage. Rando built a fine service business based on the cash-cow VAX line but did not seem to understand what needed to be done in the volume world - he was operating the service group as a stand alone business. Little noticed in the shuffle was the departure of Greg Petsch, who had run CPQ manufacturing almost since day 1, but Ed Straw is much more focused on integrated supply chain management, which will be critical to CPQ going forward.

So I regard these executive departures as long overdue housekeeping. I expect a few more before too long. CPQ has some great, can-do middle managers who understand how to get the job done, and I think the new transitional executive team understands and wants to harness that force.

On the consolidation of distributors, they may have shipped 90% of CPQ product, but they used up only 50% of the cost of delivery, so that looks like a straightforward cost cutting measure. If the co-manufacturing model works, they should be able to cut inventory as well.

It would only take a small reduction in contra-revenue to make CPQ's numbers look a whole lot better - if we take the 9% number that was knocked around in 1Q, that would have meant a total of over $800M in this bucket. CPQ only missed numbers by about $250M. So I see these as more than cosmetic changes.