Feeds

HP, Compaq in pre-vote channel stuffing claim

Hangover tomorrow

  • alert
  • submit to reddit

Internet Security Threat Report 2014

Damaging allegations that Compaq and HP boosted their most recent quarterly figures by stuffing the channel with inventory have surfaced in the San Jose Mercury.

Analysts disagree on the amount of surplus stock in the channel, and some say they see no surplus at all, but the allegations are very serious indeed.

The vote for the Sircam merger looms, and channel stuffing - where a unit shipped to a retailer is booked as revenue, even if it isn't subsequently sold - is a tactic that adds to the bottom line. HP sales shot up 40 per cent in the final quarter of 2001 over the previous quarter, triple the growth of Dell.

But the high doesn't last that long, and the hangover's terrible.

The most notorious recent example was Palm Inc, which flooded the retail channels with PDAs in an attempt to maintain its market share. Several hundred thousand returned Palms were finally consigned to the landfill, Palm crashed into the red and shed several hundred jobs, eventually losing its CEO.

Between them, Compaq and HP supply 70 per cent of PCs in the US retail channel.

UBS Warburg analyst Don Young, says that Compaq boosted its 2001 figures by at least $85 million by booking promotional extras, such as scanners and printers, as they went into the channel, a change from before when revenue was booked when the PC was really "sold" to the end user.

The argument, in the context of the merger, is that HP in particular is risking future financial problems by enhancing the short-term profitability of the company. No one knows how damaging the allegation is better than Walter B Hewlett Jr.®

The Mercury report is here

Providing a secure and efficient Helpdesk

More from The Register

next story
Facebook, Apple: LADIES! Why not FREEZE your EGGS? It's on the company!
No biological clockwatching when you work in Silicon Valley
Doctor Who's Flatline: Cool monsters, yes, but utterly limp subplots
We know what the Doctor does, stop going on about it already
'Cowardly, venomous trolls' threatened with TWO-YEAR sentences for menacing posts
UK government: 'Taking a stand against a baying cyber-mob'
Happiness economics is bollocks. Oh, UK.gov just adopted it? Er ...
Opportunity doesn't knock; it costs us instead
Arab States make play for greater government control of the internet
Nerds told to get lost in last-minute power grab bid at UN meeting
Zippy one-liners, broken promises: Doctor Who on the Orient Express
Series finally hits stride, but Clara's U-turn is baffling
Don't bother telling people if you lose their data, say Euro bods
You read that right – with the proviso that it's encrypted
Apple SILENCES Bose, YANKS headphones from stores
The, er, Beats go on after noise-cancelling spat
prev story

Whitepapers

Forging a new future with identity relationship management
Learn about ForgeRock's next generation IRM platform and how it is designed to empower CEOS's and enterprises to engage with consumers.
Why cloud backup?
Combining the latest advancements in disk-based backup with secure, integrated, cloud technologies offer organizations fast and assured recovery of their critical enterprise data.
Win a year’s supply of chocolate
There is no techie angle to this competition so we're not going to pretend there is, but everyone loves chocolate so who cares.
High Performance for All
While HPC is not new, it has traditionally been seen as a specialist area – is it now geared up to meet more mainstream requirements?
Intelligent flash storage arrays
Tegile Intelligent Storage Arrays with IntelliFlash helps IT boost storage utilization and effciency while delivering unmatched storage savings and performance.