Many high-technology companies, like Nortel Networks, Micron Technology and JDS Uniphase, have written down massive amounts of their inventory. For Example: Nortel Networks revalued its inventory parts @ $0, though the inventory initially cost Nortel $650 million.Companies are required to report whether they write off the cost value ( or book value) or their inventory even if they don’t dispose of the inventory. Later on, they may sell this iventory but are not required to report the sale for cash of previously ” worthless” inventory. The effect may be that in future years, when the inventory is sold, profits are overstated.
Also in the article, JDS Uniphase said that it will write off $250 miliion of its inventory but promised to disclose any future sales. On the other hand, Micron Technology, ehich wrote down $360 million, won’t disclose any future sale( Krantz,2001)