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

To: GVTucker who wrote (12854)	7/10/2001 2:32:21 AM
From: Gus	Read Replies (2) \| Respond to of 17183

Let's be specific. Assuming the worst and the 3 components of inventory -- parts, WIP, finished goods -- each ballooned at the end of 2Q2001, can you see any reason why EMC can not adjust the build plan for 3Q2001 to compensate? In early March, EMC indicated that they reined in its orders at Emulex because they were still working through some HBA inventory so you already have a concrete idea of how fast they respond to inventory build-ups. The most critical parts are disk drives, DRAM and power supplies none of which have been in shortage mode necessitating stockpiling measures over the last few years. EMC's Final Assembly and Testing process takes about 24 days and includes around 8 days for component stress testing, another 8 days for fully loaded system stress testing, and around 8 more days of stress testing each customer's specific configuration. As a percentage of total inventory, Finished Goods have remained at a fairly tight 23% to 28% range for the last 5 quarters. Your general caution on inventory is well taken, but the specifics do not support it.