To: Zeev Hed who wrote (16280 ) 10/30/2000 9:46:48 AM From: Road Walker Read Replies (1) | Respond to Zeev,"John, I agree with you about the retail channel. However, because of SNDK' conservative approach to these sales (not booking until these are off the retailer's shelf), the bulge should be in inventory, not AR. You put into AR product that was recognized as revenues and not paid yet, if retailers ordered big chunks for the holidays, that should show in large increase in inventories and as a large increase in Q4 sales (and probably a good chunk of AR increase then as well). Inventories have grown in line with the revenues." "If SNDK just changed method of recognizing revenues (like the 99% you mentioned), then indeed, that would be accompanied by a one time change in AR. But then we will not be comparing "apples to apples" WHEN WE LOOK AT QOQ growth of the last three quarters." really need to ask, is what percentage of SanDisks revenue had shifted to large retailers (with better payment terms, and revenue that doesn't get recognized) from about March/April through about July. During that same period, capacity was severly constrained, so the in process inventories might lower the effect the retail channel inventory levels. I would say that with the way they recognize revenue, you need to look back three to six months, not at the current report, to figure out what is going on.
