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Technology Stocks : EMC How high can it go? -- Ignore unavailable to you. Want to Upgrade?

To: Douglas Nordgren who wrote (12832)	7/7/2001 12:42:06 AM
From: Jacob Snyder	Respond to of 17183

Thanks for that (bad) news, eom.

To: Douglas Nordgren who wrote (12832)	7/7/2001 12:26:41 PM
From: Gus	Read Replies (3) \| Respond to of 17183

From that article: .....Given the slowing demand and sales growth, a large inventory charge at some point in the future is not out of the question.... Work-in-process accounted for 66% of total inventory at the end of March 2001. EMC is developing a reseller channel for Clariion and the risk of forecasting failures are higher there, but Clariion is still only 7% of revenues. We also saw that they started pulling in the reins at Emulex and Finisar in late February. I doubt that there's any significant build-up of inventory at EMC that require's a major inventory charge in the future. Succeeding Quarter's End of Purchased Work-in- Finished Hardware Quarter Parts Process Goods Total Sales 1Q2000 $ 69M $ 436M $ 174M $ 679M $1,516M 2Q2000 55M 493M 209M 758M 1,647M 3Q2000 50M 620M 199M 869M 1,816M 4Q2000 63M 702M 260M 1,025M 1,564M 1Q2001 61M 708M 299M 1,068M - 2Q2001 - - - - - Assuming Hardware at 69%, Software at 21% and Services at 10%, the preliminary number of $2B suggest that Hardware will come in around $1.4B, Software at $420M and Services at $200M. When related to the preliminary hardware number of $1.4B, the combined $1B in WIP and Finished Goods valued at FIFO do not seem alarming since EMC can readily adjust the current quarter's WIP to compensate for any logjam during the last quarter. From the 10K: 1) Inventories are stated at the lower of cost (first in, first out) or market, not in excess of net realizable value 2) In addition, EMC's revenues in any quarter are substantially dependent on orders booked and shipped in that quarter and its backlog at any particular time is not necessarily indicative of future sales levels. This is because: - *EMC assembles its products on the basis of its forecast of near-term demand* and maintains inventory in advance of receipt of firm orders from customers** - EMC generally ships products shortly after receipt of the order - customers may reschedule orders with little or no penalty