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To: Q. who wrote (577)	7/22/1998 10:00:00 AM
From: mod	Respond to of 994

Two reasons. First, much of the inventory is working product, Vidmodems and switches. My limited technical understanding is that this is not where the problems are. If they get the problematic software and missing hardware components (ATM CODEC) working, most of this inventory should be usable or at least easily upgradable. Second, don't forget to gross up the inventory figures, as they are carried at cost, not retail. Figure at least 50% mark-up, so if inventory grew to $10 million at end of June quarter, sales potential is $15 million or so, which allows for some write-offs if necessary. Dennis