Hi Ken - thanks for sharing and asking. To begin with, since I ve sold all my NT at a great loss, which used to be more than 1/2 of my portfolio, I may have a -ve bias even if I guard myself from doing so. That said, I think the letter itself is fairly generic. I am sure NT legal dept has poured over it before the release <g>. I find the following excerpt revealing, nonetheless
Our decision to revise guidance on February 15 occurred as soon as the effects of this downturn were clear to us.
We were among the first to recognize the severity of the downturn occurring in the U.S., our largest market. Since February 15, a growing number of technology companies with heavy dependence on the U.S. market have also revised their forecasts. This is clearly a broad market/economic slowdown that has affected companies in our sector with unprecedented speed.
What does "clear to us" mean? Like you said, "actual knowledge" and "reason to know" are what trial lawyers would want to establish. I mean, paper trail or not, people in the US have gone thru too much "plausible denialability" in recent political history that it is reasonable to be suspicious.
As I ve pointed out previously, one would think NT would be more vigilant in information flow after its inventory correction problem 2 Qs ago. And the capex issue is not new. Rumor has begun circulating since the Fall of 2000. The question then, what does "clear to us" mean? Maybe NT could get out of the legal entanglement, but one would be hardpressed to realize NT maintained its bullish outlook until it had 100% certainty that some of its contracts were pushed out.
I do not think NT was the 1st to report problems. It was not the last either. But again, here lies the semantic trap, "We were among the first to recognize..."
In conclusion, this letter doesn't remove any doubt surrounding 1) the bullish call only 5 wks or so earlier; 2) the bond issuance and 3) the Zurich transaction. However, since you are an attorney, you probably know better than I do that perception doesn't win [or lose] this kind of cases.
best, Bosco |
