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Technology Stocks : Storage Technology- STK
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To: Gordon Quickstad who wrote (519)5/22/1999 6:30:00 PM
From: m33806  Read Replies (2) of 560
 
Those extended accounts receivable, at best, force the company to borrow money to operate the business which hits the bottom line with interest expense. Most of STK customers are very large credit worthy businesses or government agencies who can pay promptly. The only reason to extend the payment terms are to give a customer an out if they do not like the equipment or service. Worse yet and hear is the big risk, customers may be refusing to pay because they do not like what they bought. The business at STK is back end loaded (over half the sales recorded in the last couple weeks of each quarter)so receivables will always be high as a ratio to quarterly revenue. However in the last few quarters they have been growing and now are much higher than normal. Something has changed or could be wrong. It is a red flag to pay attention to.
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