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Technology Stocks : GTIS: Is there a better bet for Christmas sales?
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To: Brian Johnson who wrote (212)12/11/1996 1:42:00 PM
From: Thomas Johnson   of 432
 
To all -

For whatever it's worth, GT's explanation of the significant drop in
cash is due to the fact that such a large portion of their distribution
business is with Wal-Mart. Wal-Mart pays GT on a 45-day basis. GT is
different from their competitors in that such a large portion of their
distribution revenue comes from a single source.

It was explained to me that one week following the close of the 3rd
quarter GT received a check for $18 million from Wal-Mart, and a week
later received another check from Wal-Mart for $12 million. Although
it is unclear to me how this translates on the balance sheet, their
investor relations is claiming that it is merely a timing issue with
Wal-Mart, depending on when the quarter ends and when they receive
their payments form Wal-Mart. It was also pointed out to me that if there
is fear that GT might run out of cash in the near future, keeping in
mind that their secondary stock offering was cancelled and don't intend
to go to the equity market while the stock price is at this level, GT
has absolutely no debt at this time - they can generate cash.

Finally, it was stated that although Wall Street's expectations got
out of hand during 1996, and are currently in the process of visiting
reality, GT is very comfortable with projecting a 20% growth rate for
1997.

Hope this is helpful.

TRJ
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