Dupont Photomasks (DPMI) Message Board

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Technology Stocks : Dupont Photomasks (DPMI)

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To: BillyG who wrote (42)	7/12/1997 9:40:00 AM
From: John Bloxom	of 955

I respectfully disagree with the foregoing analysis. First, capital expenditures are not charged against current earnings; instead, they are capitalized over the useful life of the asset being placed in service. Operating expenses that are increased by reason of capital activities, however, may be expensed and therefore charged against current earnings. It is in the interest of the company to expense all that it can so that its tax liability is minimized. This may drive the analysts a bit crazy, but it is a very sound business practice nevertheless. The benefits will accrue in subsequent quarters. As for the sufficiency of demand for the increased productive capacity, everything I read is to the effect that as circuit geometry shrinks, the demand for masks rises. I don't have a crystal ball, but it seems to me that management is doing exactly what it should do in ramping up capacity. The fact that the fast money took the stock down 9 points by not reading past the first line of the announcement is no reflection on the company itself. Fast money is just that: fast. Not necessarily smart. Might be adding to my position in this one. John

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