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Strategies & Market Trends : Steve's Channelling Thread
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To: Zeev Hed who wrote (14544)4/16/2001 11:14:22 PM
From: Sam  Read Replies (1) of 30051
 
<<By the way, can someone explain to me how CSCO can write off "all their inventory", they left the January quarter with about $2.25 B of inventories, if memory serve and now they are going to write off about that amount.>>
Just a few days ago, someone claimed that Jabil had enough inventory for the rest of the year for many of their products. Jabil does a lot of work for Cisco. So does Flextronics. And, I believe, Solectron. It wouldn't surprise me if Cisco wasn't on top of all that inventory until recently. There have been a lot of questions about who was going to get stuck with all that inventory, the ECMs who produced/assembled it or the OEMs who ordered it. Those questions weren't urgent as long as everything was getting sold. Suddenly they have become very, very urgent. I'm guessing that some very difficult negotiations have been going on over the past couple of months trying to sort things out to see who will take the hit, and CSCO's writeoff is one result of those negotiations. I would look for some writeoffs from the ECMs in the coming months as well. For the first time in about three years I am now totally out of the ECMs. It was a nice ride while it lasted, even a great ride. I hope to have another one, but will wait for awhile before reentering. It may well be possible to reenter at or near my previous cost in the single digits later in the year. Maybe Mr. Pink is right. We'll have to see.

Sam
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