As promised, a brief synopsis of the conference call:
Analysis of last quarter:
1) GM dropped from 48-50% to 46% last quarter due to lower avg selling prices for ATML products (primarily EEPROM - see other notes)
2) Interest expense increased due to increased borrowing and foreign exchange exposure (primarily yen).
3) Recievables in Days of Sales increased to 70 days this quarter from high 50's (57?) last quarter. CFO said this was due to somewhat increased asian orders (and asian companies are slower to pay?).
4) Days of Inventory increased to high 50's (57?) from high 40's last quarter. This was due to stocking up a new asian warehouse (and an increase in 'turns' business?)
5) BTB was greater than 1.0 for the quarter, and bookings increased sequentially every month of the quarter.
Future Business:
1) The CEO said that they were expecting growth in 5 different areas:
a) Flash is ramping up (1-8MB). Expect to win a significant number of customers (who used to be ATML customers (probably of EEPROMs?) but switched to other suppliers due to cost considerations (FLASH is cheaper than EEPROMs?)) in the next several months (Q2). These new customers will be primarily in the computer peripheral and cell phone (GSM and CDMA were mentioned at various times) areas. But, shipments won't start in bulk until Q3 or Q4 (the customers will take time to ramp up production).
b) Data Flash - Used to store voice or data. (It was not discussed on the conference call how Data Flash differs from Flash.)
c) Serial EEPROM's. Although EEPROM's are losing market share to Flash and the ASP is declining (see notes below), ATML expects demand to grow for Serial EEPROM's of 128K and 256K (how do Serial EEPROM's differ from EEPROM's generally?).
d) Microcontrollers. The AVR(?) Microcontroller has won many customers (more than 100 according to CEO). Used to control such things as Airbags, smart cards, ... .
e) Integration (primarily of microcontrollers with other devices.)
2) CEO said EEPROM's have had rapidly declining ASP due to competition from Tiawan (sp?) (he mentioned that ATML has filed with the US govt. claiming that Tiawan is dumping) and rising dollar, and are losing market share to Flash. However, it was mentioned elsewhere in the call that this is expected to stabalize due to the fact that EEPROM's are now starting to take market share from ROM's and are expected to take more as the feature size decreases to 0.35 microns.
3) ASIC's are growing sequentially.
4) The CEO made a passing reference to DSP's as being a growth area, but there was no further discussion on the topic.
5) Although it has been a long road to get to production of Flash, it is expected that ATML will be able to offer new Flash products much more rapidly from now on. The hard work (understanding the basic technology)is all done.
6) 0.35 micron technology is being installed in many different area of ATML, and will be coming on-line in Q3 an Q4.
7) One of the Analysts expressed concern that Flash prices have been dropping rapidly, but the CFO said that they expect prices to stabalize due to the fact that all of the new producers (Tiawan, Intel, AMD, ...) have come on line at this point.
That's it. BTW, if anybody out there understands all of the subtle differences between EEPROM, Serial EEPROM, Flash, Data Flash, ... I'd love to understand it. Thanks.
Clark |
