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

To: Just_Observing who wrote (5222)	4/30/1999 3:33:00 PM
From: Chuzzlewit	Read Replies (1) \| Respond to of 6021

JO, I thought I had gone over some of this, but it is confusing as hell. So let me backtrack just a bit and continue thinking out loud. DSO represents the amount expressed in days that is owed by customers to the company. The last decent numbers I have are the December 1998 numbers which showed the following: A/R were 261MM and sales were 272MM, so DSO was about 87 days. I don't know what portion of revenues were for services, so let's assume for the sake of argument that it was zero. Now, the cost of revenues is roughly 14.5%, so the approximate amount of inventory sitting in the channel cannot be more than $37.7MM -- and that would assume that there was zero sell through -- that is, sales from the channel to the ultimate consumer were nil. If DSO indeed swelled to 140 days and sales were of the order of $250MM for Q1 (sorry, I don't have the actual number at my fingertips) then receivables must have ballooned to around $384.6MM. These kinds of increases are monstrous, and I cannot understand how this happened. But the conclusion is that if Edwarda is correct and we assume the run rate remains around $250MM then net sales of around $134MM would come out of the channel, thus reducing channel inventory to around 90 days, but then we would expect sales from NAI to end customers to total around $116MM ($134 + $116 = $250MM). But sources are telling us $20MM in revenues. Remember revenue is net sales from NETA (which includes writedowns and allowances for bad debt). The only way I can see that happening is by massive A/R write-downs. Something is extraordinarily fishy here. TTFN, CTC

To: Just_Observing who wrote (5222)	5/4/1999 10:23:00 AM
From: AlienTech	Read Replies (2) \| Respond to of 6021

Strategy to make 114% from 25% rise by: bargain_hunter_ 11587 of 11594 I bought 8000 NETA shares at $13 yesterday, then sold 80 options ZNEAC (Jan 2001 $15 call) at $6 giving me a cost per position of $7. Would recommend potential longs consider this strategy... If the stock rises to $15 or above by Jan 2001 the owner of the calls I have sold take my stock from me for $15 and I realise an $8 profit (116%) per position, if the stock price falls but still stays above $7 the option expires worthless and I make a more modest profit. If the stock falls below $7 I make a loss, but a much lower loss than if I had simply bought the stock. Analysis:- NETA Val 21/1/2001 Profit on Shares Profit on "Postions" 0 -100% -100% 3 -57% -80% 5 -29% -67% 7 0% -53% 10 43% -33% 13 86% -13% 15 114% 0% 32 114% 113% I would make more money by simply buying the shares only if the stock gets above $32. With this strategy you give up the opportunity to profit from a huge surge in the stock price but you do get a much lower risk, very profitable position. Furthermore, the $6 cash you get per position for selling the option provides $12 of margin so the only cash you need is 50 cents to provide the extra $1 of margin per position. This helps me hold the postion for this length of time without tying up all my trading capital. If you measured this investment as a return on your capital from the 50cents plus margin costs you get a >1000% roi :)