LITTLETON, Colo.-Wireless carriers posted 54.8 days of inventory valued at $1.7 billion during the third quarter of this year, which was a week more than reported during the second quarter of this year and the most held during a quarter during the past two years, according to a study by consulting firm InfoTech Marketing.
InfoTech noted the increase in inventory was due to a nearly $200 million increase in handset inventories during the quarter combined with a slight drop in the cost of equipment sold.
“While you may expect some inventory increases as carriers prepare for the Christmas sales, the magnitude of the increase is much higher than expected,” said Tim Walters, president of InfoTech. “Carriers have added over $400 million of inventory since the first quarter and strongly need to look at their ordering and management systems.”
Walters added that carrier could generate $800 million of cash flow by reducing days of sales in inventory to 30 days, and that even if carriers with more than 40 days of inventory reduced their backlog to just 40 days they could produce nearly $500 million of industry cash flow.
“Commitment to inventory management, better forecasting and improved ordering procedures are techniques carriers can use to get to this level,” Walters said.
Sprint PCS affiliate UbiquiTel Inc. posted the fewest number of days’ worth of inventory with 27.9 days during the third quarter, followed by fellow affiliates Alamosa Holdings Inc.’s 30.2 days and US Unwired Inc.’s 31 days. Nextel Partners Inc. posted the most number of days’ worth of inventory during the third quarter with 111.5 days.