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Strategies & Market Trends : Steve's Channelling Thread -- Ignore unavailable to you. Want to Upgrade?

To: Zeev Hed who wrote (14554)	4/17/2001 8:04:42 AM
From: ajtj99	Respond to of 30051

Zeev, remember that CSCO was buying their components for the 1st quarter in November, most likely, probably along with projections for use throughout the first half furnished to their suppliers (so they could have production ramped up to handle the demand). My understanding from some trade publications is that CSCO did not cancel orders with their contracted manufacturers, so the flow of inventory kept coming. If their business is flat or dropping, but their flow of components is based upon 10% sequential quarterly increases in sales, it will pile up fast. Add in the speculation that chips were going to be scarce (so CSCO ordered extra), and you've got a big pile of inventory that was built up during the 1st Quarter as their business was being stopped in its tracks. This makes the Compaq inventory disasters of a couple of years ago look like great management in comparison.