S3 (A LONGER TERM PERSPECTIVE) Message Board

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Technology Stocks : S3 (A LONGER TERM PERSPECTIVE)

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May 12 5:00 PM EST

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To: Jan A. Van Hummel who wrote (7555)	11/7/1997 3:07:00 PM
From: Ken Muller	Read Replies (1) of 14577

Jan: You wrote<<The lawyers may have elected to confine it to the period from the date of the last quarterly release until the date of the restatement announcement for numerous reasons.>> My inputs from legal contacts indicate more actions are coming. The race was on to see who could file first. Limiting the time period made it easier to file quickly. But the key point is still going to be how and why this error happened and continued unchecked. I am having a hard time believing that NO ONE in the accounting department knew what was happening. How could Walter find the problem without an audit? The people who put the numbers together week after week and month after month do it the same way each time. The person (or staff) who compiles the disty point of sale numbers (sales to end customers) gets those reports each month. They get added up and sent to marketing and sales management regularly. Its a topic of monthly meetings for Production Control to plan build schedules. Sales commissions are paid on those sales numbers. Actual inventory levels are reviewed by both disty and the customers to insure continuous supply of product for Far East (Singapore and Taiwan) production lines. Its simply not possible to do business without up to date inventory figures. So the correct sales and inventory numbers had to be there. The question is why were they not used in the 2nd quarter? Remember, you have to change BOTH the sales revenue AND the inventory to make the quarterly report look OK. I am still trying to live with the idea that this was a mistake due to incompetence but its starting to get more difficult to believe it. Ken

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