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Technology Stocks : Apple Inc. -- Ignore unavailable to you. Want to Upgrade?

To: Eric Yang who wrote (7919)	1/22/1998 12:54:00 PM
From: Alomex	Respond to of 213173

You're saying that we may lose $80 mil due to extra boxes that Apple won't be able to sell.. Then I said that if that were the case it would be an increase in inventory and the loss would come about when Apple write it off... Then you said that because of build-to-order production line the boxes wouldn't even be manufactured. Aren't you contracdicting yourself a little bit here? Not at all. A company has fixed costs regardless of how many boxes they produce. For example, they have to pay taxes for the land where their assembly factory is, or a share of the design of the computer hardware itself. That certainly can't account for the $80 million loss from excess inventory that you spoke of. Right? Right. I assume (and surely hope) that Apple needs a certain number of orders to keep the assembly line going (in fact, I read somewhere that in Gateway 2K every single motherboard that makes it to the beginning of an assembly line already has a purchasing order with it). No orders, less production. But the fixed costs are there, which means losses.