First I hope that their sales did not stall in July and August, but that is not really the point, is it? The point is that for the quarter the increase in accounts receivable was greater than the increase in sales, and not by a trivial amount. You can go to an extreme and "claim" that in July and in August they sold only $10 MM/month and in September they suddenly sold $131 MM, and that money is still owed. Yes, in that case you could accept such a large increase in receivable, but on the other hand, if that was the case, July and August would have been negative cash flow months, and that is not something any of us want. I would guess that the actual monthly sales were more like $40, $50 and $60 MM in these three months (a nice monthly increase that will continue, hopefully), but if you take this approach, you cannot escape the fact that someone, one of their customers, is very very late on payments.
Larry, I do not know the timing of disbursement on their joint venture with Toshiba and the disbursement of $75 MM to TSMC, but sometimes in the next few quarters we should expect the cash position to go down by $225 MM, thus drastically reducing the $4.5 MM in interest earned in the last quarter. It could be that the reduced forecasted earnings may be due to the future absence of that profit. Personally, I think that this should be fully compensated by an additional pretax profits of about $6 MM from additional sales, and would not expect the next quarter to show a QOQ declin in earnings.
Zeev |
