Dee Jay, you wrote:
<<unlike U S practices where invoices are to be paid within 30 days,
overseas sales involve 90 day or more payment on billings. >>
and
<<With 55-56% of revenues generated in Europe and Asia (particularly
China and Japan) it is not out of line to have days outstanding to
be 90+. >>
These are very good points. However, I am more concern with the
trend of ever increasing receivables...for instance, cumulative
receivables as a percentage of quaterly revenues for the past four
quarters (in backward chronological order): 103%, 99.8%, 83.5%, 82.8%
Of course the amount of receivables is growing even faster than the
above trend since revenue growth has been very robust. All these
suggest to me that there might be a problem which I hope management
will address ASAP.
An immediate practical problem with such a high receivables number
is of course that MRVC has to resort to equity financing to fund
its growth. This means stock dilution for shareholders. If you think
that the latest cash infusion from Intel has solved this problem
think again. This past quarter (if memory serves me right), MRVC
burned through $4.4M in cash. That is more than what they got from
Intel. If on the other hand they are able to reduce receivables to
50% of quarterly revenues (note Ascend, Xylan, Cascade, Cisco...are
all in the 50% range) they will get an immediate $11M "cash infusion".
Furthermore, at such a level, I believe MRVC will even be cash flow
POSITIVE!
Just some food for thought.
Cheers,
Lucas |
