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Technology Stocks : Ciena (CIEN)
CIEN 230.34+9.3%Dec 19 4:00 PM EST
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To: James Fulop who wrote (10462)2/22/2001 9:20:33 AM
From: jghutchison  Read Replies (1) of 12623
 
The Inventory Non-Issue....JGh

“The one area we had to be most careful in explaining was the inventory issue,” Nettles said. “Our inventories are up, and I think the analysts did understand that, but it took some time talking through that. It’s a result of a couple of things.

“We’ve used inventory strategically to build a basis to be able to respond to customer needs, so we tend to keep a higher inventory level than a lot of other companies. But as a systems business, if you can’t respond quickly, then somebody else gets the business. And that’s how we’ve won a lot of deals historically.

“The second point is that a lot of our equipment is either on-site at customer locations, or about to go on-site at customer locations because we’ve got a number of big builds on the way. So a good part of the inventory was finished goods -- that is, in various stages of acceptance.

“We had to walk through that because the numbers themselves could look very similar to a Nortel problem that showed up in the Fall. But I think the issue in our case is very different. We’re simply building the basis for what we see as continued growth in our business, and we’re in the process of selling off gear where the build hasn’t been completed, and as a result we can’t take revenue yet.”
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