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Technology Stocks : Disk Drive Sector Discussion Forum -- Ignore unavailable to you. Want to Upgrade?

To: Frodo Baxter who wrote (1792)12/15/1997 9:37:00 AM
From: T Bowl  Read Replies (3) | Respond to of 9256
 
Hey you financial weenies...

Please explain how this works. A company produces 6mil DDs
and only sells 5mil of them. 1 mil left in inventory. When they
report the Q financials where do all of the numbers fall?

Here's my example. It costs them $1mil(fixed costs) to run the place and
$1(var cost) for every DD produced. Therefore it cost them
$1mil + $1*6mil = $7mil to produce all of the DDs.
They sell the DDs for $2 each therefore have 5mil*$2 = $10mil
in rev for the Q. In the financial summary what do they report?

Quarter 1
Rev = $10mil
Cost of goods = (What?) $1mil + $1*6mil = $7mil? Or $1mil + $1*5mil = $6mil? Or other?
Inventory (finished goods) = $2mil
Is the Gross Profit $2mil or $3mil?

In the next Q let's say that the totally shut everything down and just sell
the inventory. Do some of the deferred costs end up in this Q?
They really haven't spent any $ this Q to produce them. Do they
end up with 100% GM? Or are the variable costs of $1mil take this
down?

My real question is, will an increase in inventory for a Q
hurt or help a company in the following Q? Will the GMs
artificially be propped up or not?

Sorry for the basic questions

todd



To: Frodo Baxter who wrote (1792)12/15/1997 10:45:00 AM
From: T Bowl  Respond to of 9256
 
Lawrence -

<<Anybody know what WDC's latest guidance is on units?>> I spoke to Bob Blair this morning. "around 6mil shipped. That's not produced, that's shipped"

todd



To: Frodo Baxter who wrote (1792)12/15/1997 10:58:00 AM
From: Sam  Read Replies (1) | Respond to of 9256
 
"There is no difference between a company earning $.20, $.20, $.20, $.20 and one that earns $.20, $.30, $.40, $.50 if the latter takes a $.60 restructuring charge!"
Sure there is. Or might be, anyway. Depends on if the restructuring charge is an "honest" one or not. I'd rather own the guy with sequentially up earnings than forever flat (didn't Dylan write a song with that title once?).


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