Zeev,
However, the June q had 28% to retail with DSO of 61, while the March quarter had 26% of sales to retailers with DSO of 73 days (which I believe is accounted for by the large QOQ increase of 39% of March over the Jan Q), what is the retail portion now? 30%? surely not a differential justifying jumping from 61 days to 80 days.
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At this I time I am "inserting foot in mouth" and am also waiting for a swift kick in the pants for the post that follows. I will take all the grief that results from what follows. I waded through the series of posts that were made here by many concerned investors and held off judgement until I could get my facts straight.
A couple of general remarks first.
The flurry of posts related to the DSO item is
unprecedented on the thread. I think
this reflects the level of concern we all share
and our willingness to discuss even potentially
negative information about SanDisk.
You have made an incredible time investment
this weekend pounding home your DSO calculations.
I find somewhat surprising since you usually
post here only intermittently and never in such
great succession.
Second, much of the discussion here seemed very repetitious.
One question...
Did you listen to the conference call?
Accounts receivable increased $49.9 million (+59.7%) due primarily to an increase in "trade accounts receivable" based on higher sales volumes.
The DSO for Q3 was reported as 58 days, up from 55 days in the prior quarter
Inventory grew 44% to $67.3 million due to "increased work-in-process" required to support higher levels of business going forward and the plans to build "buffer inventory" for long lead time components to meet strong holiday shipments in the front end of the fourth quarter.
How do these facts alter your view on the quarter?
Also, I think the comparisons to SSTI are not fair. SSTI sells extremely low capacity flash chips primarily to industry players for things such as PC bios, MP3 players, cordless phones, CD-R drives, handhelds... SanDisk, in contrast, has a significant retail presence. This clearly works to their disadvantage regarding DSO given the admittedly complex sales recognition procedures that can arise (as you yourself have described).
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