Novellus Message Board - Msg: 5440181

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Technology Stocks : Novellus

NVLS 2.400

+2.1%

Jul 24 5:00 PM EST

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To: Jim Willie CB who wrote (1578)	8/7/1998 1:39:00 PM
From: Dave Chanoux	Read Replies (1) of 3813

Fun with numbers! I wrote this a few days ago but didn't post it because of all the market turmoil. I didn't think anyone would read about Accounts Receivable when the bottom was falling out of the market. There was some discussion of the level of Novellus A/R at the end of Q2. Here is some data on Novellus DSO numbers. Some would consider DSO a better statistic than simply Accounts Receivable because it factors in the level of sales. DSO is calculated as (days, typically 90)*(A/R)/(Sales) and measures how long it takes to collect. Here is some history of Novellus quarter-ending DSO (Days Sales Outstanding) for the last 10 quarters. This puts the discussion of A/R into a little different perspective. Qtr End Sales A/R DSO 06/98 142.8 171.5 108 03/98 163.2 183.4 101 12/97 162.8 133.9 074 09/97 155.0 141.7 082 06/97 114.4 134.1 105 03/97 101.6 129.1 114 12/96 104.6 119.7 102 09/96 121.6 115.5 085 06/96 120.2 114.0 085 03/96 115.2 116.9 091 Source: Press releases on Novellus website at novellus.com What makes DSO go up? - Some time ago one of the fast growing COM companies, Ascend or Cascade or one of those, shipped everything that wasn't nailed down at the end of a quarter to make expected numbers. The analysts picked it up by observing a sharp increase in DSO, and concluding that the company was stealing from the future. It turned out they were right! It looks like Novellus might have done that in Q1, but we weren't quick enough to question it then. What makes DSO go down? - declining A/R or shipping early in the quarter and collecting. The disk drive component folks like Applied Magnetics are suffering from declining DSO right now. Changes in financial practices show up in DSO also. My conclusion from all this: DSO is about the same as it was last year at this time - no fundamental change in the financial management of the business. Remember, these fundamentals might not have much influence on the short term stock price. Regards, Dave Chanoux

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