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 (7710)	11/10/1997 9:21:00 PM
From: Ken Muller	Read Replies (1) of 14577

Jan: Your question<<Since you have been in this industry for some 20 years can you tell how distributors are rewarded/paid?>> They just run a trading business. They purchase material and re-sell at a profit. They are expected to pay for merchadise on time, just like any customer..They will be under contract to stock material for customers in a geographic area. The company(S3) will provide a certain margin (18-25%) for the disty's carrying costs and profits. There is no possibility they would be ordering more material than they could reasonably sell. However, having said that, Far Eastern distributors are very savvy people. They make deals and use their connections extremely well. The SEC will never get a straight answer on what happened because the arrangements were all verbal. Its the way its done. Who's to say why they placed huge orders? You'll never see any of these guys testify in the US. Its a zero liability deal. The company will say that disty ordered more product when they were given extended payment terms. Chicken or the egg, which came first? Unless you work in the business it all seems legit. That's why you need an honest vigilent member on the board. Hope that answers your question, Jan Regards, Ken

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