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

To: Jan A. Van Hummel who wrote (8195)	12/8/1997 3:35:00 AM
From: Ken Muller	Read Replies (1) \| Respond to of 14577

Jan: >>We just lost some $60 million is sales that in reality still have to take place.I see little problem here, unless there is real old inventory of what may now have become obsolete products.<< This is the part that doesn't feel right. Distribution revenue numbers for their sales are generated by monthly "point of sale" reports. S3 sales commissions are paid on the basis of these reports. These reports cannot be altered or ignored by S3 accounting. They are generated by accounting personnel independent of S3. Therefore S3 probably has accounted for all the actual distribution revenue for both 96 and 97 on a normal basis. The erroneous revenue numbers appear to be a "double counting" of sales (counting the product when it shipped into distribution and counting it again when it appeared on the "point of sale" reports.) If this is the case, and assumming they stopped doing it after George left, we should expect llittle, if any, adjustment during the current quarter. The problem for me is how S3 can make this into a revenue time shift problem. I don't see how the normal disty revenue reports could have been altered. Some alteration of the A/R and inventory accounts would have also been necessary. Comments? Ken