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Technology Stocks : Orckit (ORCT)

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To: savolainen who wrote (1559)	10/26/1998 9:33:00 AM
From: John F. Dowd	Read Replies (1) of 1998

Dear sav and daniel: The difficulty with revenues is to know when a shipment is recognized as revenue. It is the same problem as some people were scratching their heads about concerning new shares. When the issuance of shares or the sales of product span the end of the qrtr. the numbers cannot be realized until the receivable is posted on the books in the case of sales or when the shares are registered to new owners in case of new shares issued. Without more cooperation from the company it is hard to determine when a line card shipped is booked as a sale. In the case of many hi tech products a certain burn in time is required if the contract call for same before the product is accepted. The bottom line is, when are these guys going to be able to show 50% gross margins? That seems to be the critical mass for a successful ongoing chip mfr. Until they do that they will be under a cloud of suspicion of having low balled their way into the game and not being able to produce a profit to stay in. Indeed that is why the big boys like secondary and tertiary suppliers. John

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