Zeev,
re: "We had an extensive discussion about possible "stuffing of the channels" to the tune of some $20 MM."
If you put yourself in that time frame, the 30 to 60 days before the 3rd quarter report, you may remember that there was a widespread belief that there was not going to be enough compact flash to meet the demand, a serious shortage situation. "Stuffing the channel" implies that SanDisk sales department was purposely trying to make numbers by offering incentives to take orders early. (I know because I have participated in "stuffing the channel" before in my career <g>).
My guess is that the OEM's stuffed their own channel (no pun intend), in fear that they wouldn't be able to get product later in the quarter.
Yes the DSO stands out in contrast to the dire predictions.
I hate that these guys don't recognize revenue until it sells through the retailer. The CFO that set that up ought to be fired. Trying to accurately measure inventory at retail chains is an inexact art at best. It wouldn't surprise me if their retail numbers were off 20% +/- each quarter. If you measure what leaves your docks, you know exactly what you sell. Their accounting department must be a complete mess prior to reporting, hustling to get the inventory numbers from the retailers (inaccurate because some are days old, some weeks, and they are ever changing, and retailers use differing methods), trying to reconcile the numbers with the sales, subtracting returns. What a mess. The only good part is that it smooths the numbers. If they get a new stocking retailer in a particular quarter, the initial order can represent 25%-35% of yearly sales. By recognizing revenue as it is sold, they smooth those number over the entire year.
So you don't think the seasonal effect will be a current and ongoing issue with SanDisk?
John |
