To: Jorj X Mckie who wrote (2166 ) 2/9/2001 10:59:52 AM From: John Pitera Read Replies (1) | Respond to PWER--CSCO was biggest customer, so it makes sense that PWER warns and drops 25% today. It's not surprising that the warning came within days of Cisco's (CSCO 30) disclosure that its inventories are building due to lack of demand. Cisco represents 18%-20% of Power-One sales . Power-One said that in addition to a greater than expected inventory build-up throughout Cisco's supply chain, they are also seeing inventory corrections at some of its other communications customers. The company lowered 2001 cash EPS guidance to $1.00-$1.05 from $1.33-$1.35 and revenue guidance to $690-$720 million from $790-$810 million. As we pointed out in an earlier Stock Brief, the lesson here is that there were warning signs. When you hear of a tech bellwether having trouble, check your tech portfolio to see if that company is a major customer of your holding. Take the time to read the 10-K filing as there is always a section on customers. Also read the section on competition so you're familiar with those names. If a competitor warns, there is a darn good chance your company will too as they are facing the same end market and competitive environment. Also, read the press releases as your companies report. We all look at the income statement and are familiar with margins, but the balance sheet is underrated. There is a lot of good information there. Are inventories rising faster than sales? Are accounts receivables rising faster than sales? When looking for value investments, calculate cash/short term inv. per share and book value per share (shareholder's equity/shares outstanding) as they are good indications of where the bottom is on a stock. We'll certainly do our part, but it pays to do your homework on a stock. -- Robert J. Reid, Briefing.com
