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Technology Stocks : Xicor ?
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To: steve olivier who wrote (2356)7/22/1999 7:08:00 PM
From: jeffbas  Read Replies (2) of 2920
 
Steve, here's my input on your post. You may be too optimistic on sales depending on whether European vacation season affects demand. It's just anyone's guess in my opinion.

I agree the effect of Yamaha seems way understated. If 20% of sales is worth 2% of gross margin, that suggests that 100% of sales is worth
10% of gross margin -- and would bring gross margin up only 8% more to
about 34%. This is the equivalent of saying that Milpitas CGS was 76%,
while Yamaha was 66%. This is disturbing. 20% of sales being worth 4% makes a lot more sense to me -- with Milpitas CGS 78%, and Yamaha 58% -- and Yamaha yielding about double the gross margin as Milpitas.

Question for you considering your expertise. Can you impair a fab that is not shut down but still producing at yearend 50% of sales, or only impair it partly -- especially if it might be saleable? What are the general rules here?

I totally agree with your conclusion. We are already at $-.10 and effectively cash neutral, with 80% of production shift to come, all of major customer Japan and much of semi industry recovery generally to come, all of C7 benefit to come, and almost all of new non-memory product and new large customer benefits to come. It is hard not to jump up and down and pound the table.
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