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With legitimate sales tough to come by, is there really any wonder some have resorted to illegitimate means to boost their revenue? Particularly galling is the raft of companies that have taken to channel stuffing to artificially increase their top-line sales. The practice, which can take on many forms, basically amounts to pushing unwanted products onto distributors, VARs and retailers, and counting those shipments as sales. The practice is dubious because the products simply sit unsold in a warehouse, destined only to gather dust or, worse yet, to be returned at a later date.
Because little or no money ever changes hands, the Securities and Exchange Commission (SEC) and various accounting governing bodies seriously frown on these antics, preferring that a sale not be booked on a "sales-in" basis, but when money changes hands and goods move to a third party on a "sell-through" or "sales-out" basis.
Still, channel stuffing continues. Recently, several companies have wrestled with it, including Clear One Communications and Symbol Technologies. Network Associates, meanwhile, continues to wrestle with past channel-stuffing problems. In late March, the...