Fund manager Noah Blackstein and I clash (in good humor) on occasion on Kudlow & Co., which I was on Friday night with the always affable Cody Willard from TheStreet.com. Noah, the good Canadian he is, loves Research in Motion (RIMM), which is a Canadian company.
When Larry (as in Kudlow) asked me what I thought, I reminded him that RIMM records revenue on sell-in, and (taking a page out of Bill Fleckenstein's analysis from his website, Fleckensteincapital.com) last quarter saw revenue rise 30% while receivables were up 62% and inventories leaped 133%. In other words, there was a lot of quarter-end sell-in.
Noah argued that all of that sell-in is the company's hot new Pearl phone. Maybe, but I reminded him that Palm (palm), which also records revenue on sell-in, had a big quarter two quarters ago with sell-in of its news Palms. Turns out they didn't sell as well as expected, leading to a stuffed distribution channel, which in turn stole from future sales - a reminder of the risk with RIMM.