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To: MKL who wrote (7406)	2/26/1998 1:29:00 PM
From: Frodo Baxter	Read Replies (1) \| Respond to of 9124

>They are typically depreciated over 7 years with very low risk... Most of these equipment have to be replace (converted) anyway when product changes! Current DD product cycle is less than 2 years. Wow, I thought depreciation schedules were secret. Where do you get these numbers? >So, equipment breakdown is not a major issue. If you followed my silly exercise in this and the other thread, you know (or should have guessed) that I wasn't really saying that the machines that the food chain folks buy break down. Instead, they are no longer able to produce a product that their customers would pay for (i.e. they are no longer able to print money).

To: MKL who wrote (7406)	2/26/1998 11:07:00 PM
From: Stitch	Respond to of 9124

MKL, The specialized test equipment (non scope, and other generalized stuff) you refer to in your post is typically amortized over 5 years. The demands on these systems do change more rapidly but most suppliers , who also race the technical curve, have been able to provide upgrade paths. These upgrades are not cheap however, sometime requiring replacement of entire read/write channel, or positioning system, or other major suub assy of the system. Upgrades that I know have have approximated 70% of the original system cost. The amortization schedule, in my opinion, is frequently not aggressive enough but I have no guesses how much this affects the book. Best, Stitch