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To: Jenna who wrote (18180)	11/6/1998 8:12:00 AM
From: alruss	Respond to of 120523

SFSK holders -Caution- Greenberg dumps on SFSK Herb on TheStreet: Did Safeskin Stuff the Channel to Make Last Quarter's Numbers? By Herb Greenberg Senior Columnist 11/6/98 6:30 AM ET Whenever the analyst from the investment banking firm that took a company public downgrades that company to a hold and raises questions about whether it's stuffing the channel, it's wise to pay attention. Such was the case a week ago, when Salmon Smith Barney's Melissa Wilmoth downgraded Safeskin (SFSK:Nasdaq), which makes rubber gloves, to a hold. Wilmoth is no stranger to this column. A year and a half ago she made the gutsy call of downgrading Wall Street sweetheart Heartport (HPRT:Nasdaq) over concerns that surgeons didn't like its minimally invasive approach to open-heart surgery. (She was right, and the stock collapsed.) Safeskin is a very different story. Its gloves are among the most popular in the medical industry. So popular, in fact, that the company has pretty much promised that it can grow sales and earnings by 25% per year for the next several years. Last quarter, in fact, they were up 32%. So, what's Wilmoth's beef? While sales were up 32%, the company missed estimates. On its own, that would be a concern but generally nothing more than a heads-up. Earnings, meanwhile, at 27 cents per share were in line with expectations. But the company's tax rate of 2% was sharply less than the 10% analysts had expected. That's not good when added to the missed sales but still just worth monitoring. The real trouble occurred with receivables (unpaid bills), which jumped 61% from the prior quarter while sales were up a mere 5%. Even without the other concerns, such an imbalance would be more than your typical eyebrow raiser, because it suggests the company is pulling out all stops and allowing generous payment terms to get distributors to take more gloves than they really need. Add a jump in the days outstanding of receivables to around 59 days from 39 days and you get the kind of full-blown worry that causes analysts like Wilmoth to issue a warning. The corker for Wilmoth was the company's insistence during its analyst conference call and in a subsequent conversation that it hadn't given any favorable terms to distributors. Yet she found one large distributor that had received exceptionally favorable terms from Safeskin during that quarter for the first time in a year. Another distributor, while not getting favorable terms, told her it bought an unusually large amount of product in a single order from Safeskin -- enough to equal 8% of the quarter's sales. Wilmoth's conclusion: "I think they're trying to make their estimates," and stealing sales from the fourth quarter to fatten up the third. "We're getting into a situation where their numbers are becoming increasingly higher and therefore are increasingly more challenging to meet. It's the law of big numbers. When you have a bigger base, it's harder to consistently grow at a rate of 25%."

To: Jenna who wrote (18180)	11/6/1998 8:58:00 AM
From: Knitwit	Read Replies (2) \| Respond to of 120523

Hi Jenna, Maybe there will be some bargains today. Everyone is buying GERN(I must say I kinda wish I was in it but am looking on):-) I'm looking at IFCI,DGII,ACSC and KM as earnings plays. All but ASCS ran up yest. Should I buy on pullbacks? I noticed that Yahoo had the earnings date for IFCI as Nov. 12 rather than Nov. 10. Do you know which is correct? Thanks Becky PS. I took yest. of too. Was sorting Oysters in the beautiful sunshine on the coast of Maine. Good for the soul! I don't know how you do all you do!