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: Michael who wrote (7560)	11/7/1997 3:49:00 PM
From: Ken Muller	Read Replies (1) of 14577

Michael: For the customers (international distributors) to make the error, all of them during the 2nd quarter would have to have given S3 point of sales reports which were identical to the shipments that S3 was making to them. Its the inventory numbers that give this scam away. OEM suppliers (like CPQ and Dell) review inventories at the supplier's level each week to insure no line shortages. The inventories are kept in the distributor's warehouse in Singapore. Those numbers are tracked daily and published weekly. The customer, distributor, sales and marketing and production control all get a copy. Those inventory numbers are watched like a hawk. There is zero possibility that S3 did not have the correct numbers. In order to publish the 2nd and 3rd quarter reports the way they did, they had to show lower inventories than actually existed to justify higher sales revenue. This would have required accounting to knowingly ignore the the weekly and monthly inventory numbers which were being generated, within S3, for 6 months! This is just too difficult to accept as an incompetent action. I think they knew all along.

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