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Technology Stocks : Diamond Multimedia
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To: AmericanDane who wrote (3725)10/12/1998 8:06:00 PM
From: Jonathan Quick  Read Replies (1) of 4679
 
AD,

Not sure how you arrived at the conclusion that Diamond is in a "strong distribution" position. The fact that Diamond had to cease production for a quarter and actually push-out 3Q commit dates into the following quarter suggests that the company had no clear idea of what it had in inventory. They've accomplished a reduction, but can you say with any degree of confidence that they have improved their inventory management systems to the point where such drastic measures can be avoided in the future?

As for cash in the bank, Diamond's accounts receivable balances have fallen along with its cash position compared to the previous quarter. The former was probably precipitated by the inventory fiasco, the latter as a result of acquisitions.

The "strong retailing season" only benefits Diamond if they can get the product into the store in time to take advantage of a seasonal increase in demand. The backlog from 3Q makes this problematic.

Jonathan
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