Intel Corporation (INTC) Message Board

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Technology Stocks : Intel Corporation (INTC)

INTC 48.32

-0.8%

Jan 15 3:59 PM EST

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To: GVTucker who wrote (178715)	7/16/2004 5:26:04 PM
From: rkral	Read Replies (1) of 186894

GVTucker, I'm still trying to understand all the ruckus over the $427MM increase in inventory during the most recent quarter. After all, that's only 5% of the quarter's revenues ... as someone else on the thread pointed out. But it occurs to me that inventory is valued at cost. At a typical gross margin of 60%, doesn't this mean at least $1 billion (~=$427MM/0.4)of revenues will be required to deplete that $427MM of "excess" inventory? It also occurs to me that the 2.5x multiplier is really only appropriate for $157MM increase in finished goods inventory. The multiplier for the $230MM work-in-progress ("WIP") portion would be somewhat higher ... as additional costs will be incurred before WIP becomes finished goods. I haven't a clue as to how much higher. In this light, I better understand Andy Bryant's statement that (paraphrased) "working off the excess inventory will require 6 months". Your corrections and comments appreciated, Ron

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