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Technology Stocks : Intel Corporation (INTC)
INTC 41.41+2.2%Dec 5 9:30 AM EST
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To: TGPTNDR who wrote (69726)12/10/1998 11:00:00 PM
From: nihil  Read Replies (1) of 186894
 
RE: Inventory cost not higher than production cost

Give it up, and study some elementary accounting. You can't puff up your inventory values above production cost, or you go to jail. Its called tax fraud -- since -- when you eventually sell them (or write them off), you deduct a higher CGS from your revenue and pay lower taxes than you ought having previously paid higher taxes than you owed. There is a whole symphony to be played on interperiod shifting of earnings. Microsoft specializes in shifting earnings into the future by delaying revenue recognition and has no doubt had many tedious discussions with their own and IRS auditors on the practice. CPQ specializes in shipping next month's orders this month (channel stuffing). Intel in the past has compensated customers for post shipment price cuts (their inventory obsolescence -- thus punishing their own channel stuffing and discouraging Intel guys from trying it by their accountability system), but is now trying to coordinate production and orders for mid-size and large customers. What Intel actually needs is a 6 day turnaround (hardly time enough for paint to dry) on chip production, rather than six weeks. As it is, there are bound to be over and under production regardless of how hard Intel tries to match production to orders. This is the inevitable and unavoidable result of BTF production.
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