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Technology Stocks : Network Associates (NET)

NET 236.81

-4.6%

12:49 PM EST

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To: Tim Robbins who started this subject	12/27/2000 11:59:36 AM
From: Don Earl	Read Replies (2) of 6021

NETA: Another channel stuffer gets hit by SAB 101. For the Staff Accounting Bulletin 101 see: sec.gov To understand why it's hitting channel stuffers in Q4 see SAB 101B: sec.gov For years a lot of software companies, box makers, chip manufacturers, etc. have used the channel to meet or beat their numbers. A lot of investors have been mystified over the years to find their favorite tech stock clobbered once every 12-18 months when they are forced to clear the channel. The new ruling will stop this questionable practice by requiring companies to only count "sell through" as revenue. In the long run, it's also likely to improve margins as the typical scenario is to offer channel partners deep discounts at the end of the quarter as an incentive to take on the additional inventory. Reuters would like everyone to believe the economy is causing the recent rash of tech warnings and nothing could be farther from the truth. The combination of SAB 101 and the implementation of the "Fair Disclosure" rule (see: sec.gov ) have changed a lot of things. Probably for the better. Companies can no longer give their favorite analyst guidance ahead of the rest of the market, which has historically amounted to legalized insider trading. What you're seeing right now is panic being spread by the analyst community in order to create buying opportunities for themselves. Since they can no longer depend on insider trading to give themselves an edge in the market, they now need to look for absurdly under valued situations to leave plenty of room for upside potential. Of course, cutting their ratings to push the bottom a little lower always helps too.

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