So, how much cash will be left, at the end of calendar year 2001? It's pretty clear business conditions are not going to improve before then. So, earnings are going to be barely positive ("very low single digits"= 0.02?), not just 3Q01, but also probably 4Q01 and 1Q02. After that, maybe an upturn (and maybe not, if we get a recession).
At the 1Q01 report, they had 4.8 B in cash and equivalents and short-term investments. They just announced 3.5B in charges. Is it fair to simply subtract 3.5B from 4.8B? Is it fair to assume that they got almost all the restructuring and inventory write-offs done, with this announcement? (probably yes, IMO). Are reserves against bad debts adequate yet? (probably not, IMO)
This announcement adds some clarity, but, IMO, they will need to do it one more time, maybe just before the 4Q01 report comes out. Not as big, but still sizeable. And, when that news comes out, cash (plus equivalents and short-term investments) will be about gone. |
