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

To: StaggerLee who wrote (1046)	4/22/1998 7:15:00 AM
From: oexwa	Respond to of 4903

It seems as though some companies will do anything to try to beat the estimates. As you said, an unreconciled merchandise adjustment should not be an extraordinary item. Perhaps the novelty factor is wearing thin as sales, while increasing, are slowing, quarter by quarter from a 51% increase in the first quarter last year, they have increased by 35%, 32% and now just 22%. On the other hand, cost of sales has gone from 85% to 93% in the current quarter and other costs have gone from 14% to 20% over the past year. It is hard to see how they will ever make any money if these trends continue. I wonder what they paid Yahoo! for their new link. I bet it wasn't cheap. Bob

To: StaggerLee who wrote (1046)	4/22/1998 12:38:00 PM
From: Andrew Abrams	Read Replies (1) \| Respond to of 4903

Not that I'm defending what ONSL did here (lost precise control of the inventory), but writing down inventory is a VERY common practice, especially in a distribution business. As the inventory ages, and you should talk to technology companies if you want to see how fast this can actually happen, it becomes a question of the possibility of sale at the carried price. When it's not feasible anymore, or when the potential selling price of the inventory is substantially lowered, a good CFO will write the inventory down. (Fololow the retailers for a while to see this in action). Unfortunately, they seem to have had a weak CFO, who was not experienced at all with inventory (they were really a service company up until recently) and he was booted, as he should have been. No analyst will exclude the amount from the numbers, but as it was a 1 time event, will not carry the charge forward into succeeding quarters. If they screw up again, then I would be concerned as to their ability to accumulate inventory and make the sales accordingly. If this happens, it means they are not as good at purchasing items at a realistic price, and that would invalidate the entire premise. AA