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Technology Stocks : Applied Materials No-Politics Thread (AMAT)
AMAT 301.11+6.9%Jan 9 9:30 AM EST
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To: matt dillabough who wrote (11012)7/27/2004 8:35:17 PM
From: Cary Salsberg  Read Replies (2) of 25522
 
RE: "Q2 inventories rose to 77 days, up from 74 days in Q1 and 71 days in Q403; that's still well below the peak level of 105 days reported in Q101, but notes that days of inventory have risen for two quarters in a row after declining for 11 quarters previously."

So, after 11 quarters of decline, the number came to rest at 71 days. One would believe that 71 days was not excessive, possibly less than what expanding sales would require. From this bottom the increases were 4.2% and 4.0%. Since days of inventory is determined by the value of the current quarter's sales and the value of inventory, an increase in inventory days during a period of rising sales represents a bigger % increase in inventory than the % increase in number of days. Absolute inventory value increases would be valuable here. From this data it is not possible to know if the industry has "over-anticipated demand". Fab utilization is very high and sales are expected to grow next quarter. Higher inventory may be an appropriate step to counter possible fab capacity induced shortages. I don't know and I suspect Merrill Lynch doesn't either. They probably accurately reported inventory days.
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