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Technology Stocks : American Power Conversion -- Ignore unavailable to you. Want to Upgrade?

To: Mark Marcellus who wrote (2086)	2/17/1999 11:19:00 PM
From: Mark Marcellus	Read Replies (3) \| Respond to of 2574

Yesterday I spoke to Debbie Grey of IR and got some answers to my inventory questions. According to Ms. Grey, APCC found that the reduction of inventory levels achieved in 1997 was too aggressive and resulted in lost sales. Spikes in demand occur whenever there are power outages and if APCC units are not available, customers will go elsewhere. Since APCC cannot predict when outages occur, they are forced to keep inventory levels higher to cope with unexpected demand. Other points covered include: - APCC has moved some manufacturing to the Phillipines, which is lower cost but increases inventory levels because there will always be 6 weeks of inventory at sea. - APCC products have a 3-5 year life cycle, so obsolescence of inventory is less of a problem for them than for others in the PC equipment business. - They are attempting to improve their supply chain management. Oracle was installed about a year ago to aid in this effort. - 30 days inventory in the channel is a good rough guideline, but can vary widely and she would not be any more specific than that. APCC does not attempt to reserve for excess inventory levels in the channel. - There has been no serious deterioration of the WIP improvements achieved last year, although she could not be any more specific than that. APCC does not break out WIP from finished goods. - Going forward, we should not expect any meaningful reductions of the current inventory levels. FWIW, Mark