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Technology Stocks : Speedfam [SFAM] Lovers Unite ! -- Ignore unavailable to you. Want to Upgrade?

To: My Father's Son who wrote (3095)	7/4/1998 2:11:00 AM
From: Robert Schling	Respond to of 3736

Dennis, I must respectfully insist on this point. If you produce less during a given period (say a quarter), your fixed costs (such as manufacturing overhead, etc.) will be distributed over a smaller volume of production. Consequence: your unit cost goes up, margins go down. If you produce more, exactly the opposite happens. Running up inventories (finished goods) is a classic, and easy to spot trick to improve your numbers at the end of an accounting period. You simply "hide" costs in inventory instead of letting them flow to the bottom line. I am of course assuming that the increase comes from finished goods and work-in-process, not raw materials (which would be unusual during a slowdown). I may even call IR on this one. By the way, I'm long SFAM (again, after selling out between 30 and 40, and considering to take a small loss and get out for now). Robert