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Technology Stocks : SonicBlue
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To: Calvin Scott who wrote (44)6/30/2001 10:22:21 PM
From: baystock  Read Replies (1) of 67
 
<but I find the most distressing news being the “need” for Pots to sell up to 50% of the stake in UMC and use derivatives to raise “tax free” funds.
What is distressing about this is the need to raise funds in general. I take this as meaning that they are running out of money. This is a very bad sign indeed.>

They have been burning cash at the rate of $60-100 million per quarter for at least the last 5 quarters. This is why the need to sell their UMC holdings. The following is from their latest financials:
"Cash used for operating activities was $61.7 million for the three months ended March 31, 2001 and consisted primarily of the Company's net loss of $335.8 million, which included a non-operating loss on its UMC investment of $458.0 million and deferred income taxes of $189.8 million.
Cash used for operating activities for the three months ended March 31, 2000 was $104.3 million. "

Considering that they are playing in the cut throat competetive consumer market, I see these losses continuing on for a long time.
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