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Technology Stocks : American Power Conversion

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To: Mike Farrar who wrote (2006)	4/23/1998 7:57:00 PM
From: JimieA	of 2574

Also not favorably impressed with APCC's results either. Although earnings were in line with estimates, but some things did not look that good. Although sequential sales growth not important, since business is cyclical. Asset management was lousy in the 1st quarter. I thought APCC was getting a handle on excess inventory and receivable, but not now. Sales decreased by $33 million, receivables increased by $19 million. The Days Sales Outstanding (DSO) has gone from 47 days at 12/31/97 to 62 days at 3/31/98. Inventory also has got out of hand. Increasing $26 million since December. It is a poor excuse that they are buying in the 1st quarter for increased sales in the 3rd and 4th quarters. Someone should get them a book about Just in Time inventory management. Operating income margin going from 18% in 1997 1st quarter to 16% in 1998 was also not a good sign. Operating income was only up 13%, not the 20-25% goal. What helped this quarter, that APCC conveniently did not mention was exchange rate losses in 1997 vs. gains in 1998. Although I have no idea how this will effect the stock price, which I own. I also own ANET, and thought that its' quarter was poor, but stock went up. Good luck

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