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Technology Stocks : Vitesse Semiconductor

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To: Trader Dave who wrote (2168)	1/8/1999 11:56:00 AM
From: Wizard	Read Replies (1) of 4710

Agree with most of what you say Dave. "The product cycles and design wins have much more persistence" is a good point for the WAN layer but is different than the LAN layer. I point out though that no matter what end-market you serve, components are components and still subject to how customers decide to keep their inventories (which may or may not be in-line with end-market communications demand - which is clearly robust). The worst-case scenario is when customers over-order because of a shortage of components. This would artificially inflate the stated bookings growth and book:bill ratio. My perception of VTSS management is that they are entirely competent at managing normal fluctuations in customer inventories. In fact, although they didn't confirm this, it seemed to me they intentionally keep their customers in a shortage so that customer inventories won't build. This would inflate bookings numbers anyway but maybe they are understating the true bookings number because they know the game. Whether true or not, the company certainly has to be commended for its consistent execution.

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