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Strategies & Market Trends : Stock Attack II - A Complete Analysis -- Ignore unavailable to you. Want to Upgrade?

To: Joan Osland Graffius who wrote (38370)	7/24/2002 11:09:55 PM
From: Lizzie Tudor	Read Replies (1) \| Respond to of 52237

The issue is that if you have money prior to posting the sale on your books, you can do some things with your cash but you wouldn't want to use that cash for operational expenses yet. That leaves say 20mm/day which is yours to invest for an interim timeframe at which point you can do what you want with it. Investing 20mm/day in short term instruments adds up to a lot of money- and it shows up on the books that qtr. This is one reason (but not the only one) that Dell, cisco etc. have boatloads of cash. I'm just saying that if investors are looking for fundamentals to show the superiority of one model vs. another, one thing to look at is the balance sheet. But to only look at the fundamentals in the context of the prior model and say, oh well all this cash doesn't matter- who cares how it showed up etc. kindof misses the point. Now if once the cash comes in, the investors feel that the treasurer is using the superior cash position to acquire poorly, or make speculative investments that don't pay off thats another matter. In real world terms I know that before the bto model took over pc manufacturing, tons of players used to factor receivables on poor terms because they needed the cash to operate. Now theres a terrible expensive option. Dell never had to factor and could use their cash in expeditious ways. If you really looked at the balance sheet of the companies that factored you could see that Dell had the superior model but you had to be pretty astute because all these details are hidden in the 10Qs. Meanwhile Dell is investing in plant and equipment etc while their competition cannot, the cash position made the difference I believe. But you wouldn't have seen much of a difference in earnings while all this was going on. Lizzie edit- whoa! Too much fundamentals on a trading thread I see... I'm going back to lurk mode before i get banned LOL