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Technology Stocks : Network Associates (NET) -- Ignore unavailable to you. Want to Upgrade?

To: TraderGreg who wrote (5220)	4/30/1999 1:23:00 PM
From: Chuzzlewit	Read Replies (1) \| Respond to of 6021

Trader, I'm not sure where the 140 day's inventory figure came from. We are really talking about DSO (day's sales outstanding). I believe Edwarda said that it was from the CC. But to answer your questions: 1. Inventory in the channel is a drag on capital, especially in technology where inventory can become obsolete very quickly. There is no SEC mandate on this issue. It is simple prudence to reduce inventory. I can't tell how much inventory is sitting in the channel. All we can do is gauge how big the receivables are, not how much has sold through to end users. 2. A sale is recognized when inventory is in the hands of a customer. So if a company provides a reseller with goods it is considered a sale, and an account receivable is recognized. As the reseller takes more and more inventory, the A/R continues to rise. DSO is the measure of how many days sales are as yet uncollected. Inventory within a company's control is not considered a sale. Selling lots of inventory to resellers is a way to pump up sales, but if the reseller doesn't pay because of agreements with resellers sales are inflated but cash flow is not impacted by these "sales". That's why it is a good idea to watch cash flow. TTFN, CTC

To: TraderGreg who wrote (5220)	4/30/1999 1:30:00 PM
From: Just_Observing	Read Replies (2) \| Respond to of 6021

TraderGreg, I am as ignorant as you are. I know that NETA management was aiming for DSOs of 90 days. In the Sept 98 quarter, DSOs were 84 days, Dec quarter - 89 days. In the conference call in January, management said DSOs would be in mid 90s for the March quarter. I don't know what the DSOs actually were in the March quarter. But then what is the relationship between inventories and DSOs ? Are they recording inventories as sales ? Apparently, there has to be some relationship or NETA would not be aiming for inventories (or is it DSOs?) of 90 days. Are they changing words just to obfuscate? I don't have a clear picture of NETA and it only gets more unclear. Chuzz is the one who can explain this.