Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Technology Stocks : S3 (A LONGER TERM PERSPECTIVE) -- Ignore unavailable to you. Want to Upgrade?

To: Jan A. Van Hummel who wrote (8187)	12/7/1997 10:16:00 PM
From: Ken Muller	Read Replies (1) \| Respond to of 14577

Jan: I took some time off over Thanksgiving holiday to think about what happened at S3. (I had assumed, erroneously, that the accounting errors were mostly in the 2nd and 3rd quarters 97). I went back and reread S3's statement a number of times. I didn't like like what I found. Help me out on this one if you will. ""We are currently implementing measures to ensure that this type of error will not recur," said Gary Johnson, S3's president and CEO. "The inventory at our distributors' locations today consists largely of S3's 2D and 3D mainstream products. Based on the rates at which this existing inventory is expected to move through the channel, we expect the bulk of the revenue from that existing inventory to be recognized during the fourth quarter of 1997. Any new shipments into the channel during, and subsequent to, the fourth quarter of 1997 will be recognized during the quarter in which those products move off the distributors shelves in line with company policy." Read this statement carefully. This statement describes the orderly movement of goods through the distribution channel. Nothing more. It says nothing about which inventory had been counted incorrectly as revenue. The casual reader (me) would take that statement to "imply" the problem was related to goods currently in inventory (2nd and 3rd qtr). This, as the restatements indicate, was incorrect. My question, Jan, is why was this statement put in? It implies the problem to be recent rather than long term. Do you think this is still a case of general incompetence or a continuing effort to mislead the shareholders? Wouldn't this statement have to be read and approved by all on the board before release? Ken