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Technology Stocks : Cisco Systems, Inc. (CSCO)

CSCO 78.03

+0.8%

Nov 14 3:59 PM EST

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To: Tulvio Durand who wrote (47966)	2/5/2001 2:47:16 PM
From: Stock Farmer	Read Replies (2) of 77399

Tulvio - Uuum... yes, I am serious - but not to the extent of your extrapolation. Point blank: you can reduce inventory by reducing how much you purchase at constant rate of sales. You can also quench your thirst by drinking water. Both statements are true. Both, if taken to the extreme lead to unpleasant results. As to whether or not CSCO is "slashing purchasing"... well, there is a lot of moaning over on the BRCM thread. This isn't bad for CSCO. It's bad for BRCM, but then again CSCO did mention that it was stocking up. And it did. And the inevitable "unstocking" has to occur. Unstockpiling of inventories occurs by depleting them faster than stocking. Not to zero. Just until they get to the right level. Rates of sales, purchase & production need to be balanced. You are correct that in the real world you don't reduce inventory to zero, and that a growing company should expect to see a growing inventory (see my post to FD where I made the same point). John.

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