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Technology Stocks : ACTM $100 Million Cable Modem Contract with MOT -- Ignore unavailable to you. Want to Upgrade?

To: Rob Preuss who wrote (612)	3/12/1998 11:11:00 AM
From: jeffbas	Read Replies (2) \| Respond to of 1250

Inventory turns - I believe a definition is the amount of annual sales divided by the amount of inventory. (I am not sure what periods you match one to the other.) For example, if sales are 300 million and inventory is 60 million, inventory turns is 5.0 - the number of times inventory is turned over in a year to generate the year's sales. ACT's was under 5. Some of ACTM's peers have inventory turns of 10, which means that the inventory is being used much more efficiently, and less working capital is required to support a given level of sales. On a couple of conference calls, mgmt was encouraged to improve the working capital performance, but it never got better - in fact worse as sales slipped but inventory did not. You can make an argument that ACTM requires a somewhat higher level of inventory to support a given level of sales because they deal in a lot of small orders and probably do need to have a greater variety of stuff on hand. On the other hand, if inventory was overstated because of financial irregularity, or because obsolete inventory was never written down, their inventory performance might have been fine with respect to the inventory that was really there and usable.