GTIS - Will it be a Phoenix or not ? Message Board

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Technology Stocks : GTIS - Will it be a Phoenix or not ?

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To: John who wrote (1672)	3/5/1998 4:16:00 PM
From: RJC2006	Read Replies (3) of 2319

OK, let me say that I consider any position in GTIS to be a risky venture. Not that all stocks aren't but this one especially. Now about inventories and accounts receivable. I can't hazard a guess how their accounts receivable and inventory ledgers are structured. In other words at what point does an item cross over from inventory, A/R to sales. It's hard to pinpoint as there is obviously some returnables policy on games. Now whether GT or their retail customers (the Electronics Boutiques of the world) or both for that matter bear the brunt of markdowns I don't know. In other words its out of my league to say whether a retailer has the option of marking down to dilute an inventory (thus not affecting GT at all) or whether they can just simply send it back (greatly affecting GT). And yes, at some point the factory takes the markdown but I don't know if they take the primary action along these lines. I am sure there is someone who could answer this question but at least I asked the question. Inventory (remembering Scot's question) is another matter. We can only guess what items are actually contained in an inventory. In other words, is the bulk of inventory contain Total Annihilations, Duke Nukems etc. or does it contain Mageslayers and Imperium Galacticas? See the difference? Now, another facet should be recognized. True, inventory has risen from last year to this year but so have sales. The increase in inventory (like the increase in A/R and A/P) can be a result of a rise in sales. Sales increases put a burden on inventory and at some point a factory must compensate. The trick is that they don't over compensate. Figuring that out short of calling the company directly is anyone's guess. Their accounting structure is the name of the game here. Are all shipments immediately debited to A/R and then A/R is credited upon returns? An important question to answer as a shrinkage in A/R may not be commiserate with an increase in sales (it could be charged against inventory or returns). I too share your diffidence about the flock of lawsuits that will soon be hitting GT. Regardless of their validity they will keep the stock under pressure. At some point, regardless of the outcome, there is going to be a charge. Should the worse case scenario be proven and GT is indeed proven to have NEVER been profitable then they can kiss it good-bye for a long time. Even if they win though, the money to win has been spent and you know that it's in the millions. It always is. My feeling is that if it doesn't dip below 6 soon it probably won't barring some other gem of a news story! I guess we'll have to wait and see. My guess is that if it does dip below 6 then there is no telling where the bottom is. But at six how much deeper can you dig? I am with you. I want to try out the expansion pack too. The price is right.

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