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Technology Stocks : MRV Communications (MRVC) opinions?
MRVC 9.975-0.1%Aug 15 5:00 PM EST
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To: Grommit who wrote (4204)7/12/1997 7:55:00 AM
From: Grommit   of 42804
 
Excuse me..................

WBendus, I was a little too mirthful at your expense in my answer. Your answer has merit in that the costs do eventually end up in the income stmt, but they could be inventoried for awhile at a distributor. In fact, many companies intentionally or unintentionally pump up disti inventories to affect profits. You could also help your own profits by increasing your own internal finished goods inventory levels. This inventories the labor and overhead costs until you sell them. The former, in a very loose sense, inventories the profit margin also. Again, messing with reserves and other accounting estimates would be easier way to cook things. And I agree with you that no reason to think MRVC would to do this, and this discussion is just theoretical.

you said:
WH would have to report the inventory as purchases, ie a cost that goes into COGS and would erode the earnings of WH. Thoes erroded earnings would translate to erroded earnings for MRVC.

Grommit
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