Lexar Q not quite as nice as Stange's spin makes it out it be. Consider their balance sheet, especially these two lines:
Sept. 30, 2001 Dec. 31, 2000
ASSETS
Current assets:
Cash and cash equivalents $14,980 $8,755
Short-term investments -- 19,987
Yes, as their press release said, cash was up over $6m, but that was because they lowered their short term investments by almost $20m, so they had negative cash flow of around $14m.
Then consider:
Inventories 6,545 27,536
Well, this is surely a good thing--inventories down in a time of falling prices. But the problem, I suspect, is: they are so cash starved, it looks like they couldn't afford to produce more than they did. Their loss was so much reduced because their sales were coming out of inventory; but will they be able to continue to produce enough to keep going in the coming quarters, especially with falling prices which means they will lose money on each item that they produce and sell?
Look at their total assets:
Property and equipment, net 2,622 3,364
Goodwill, intangibles and other
assets 1,154 4,530
Total assets $36,025 $74,848
Assets have dropped by more than half over the past year. And while I'm not really sure what "Deferred revenue" refers to in this case, I'm pretty sure it can't be good that it has mushroomed from $446,000 to over $7m in the past year. Nor that stockholders' equity has fallen from $49m to $8.5m.
If Lexar hadn't fleeced investors last year with their stock offering, they would be gone today. Unless something miraculous happens, it looks to me like they will be gone by this time next year. Perhaps they will have some intellectual property left which they can sell to some lawyers who will wander around the court systems suing people for the next 10 years, like Rodime did with the disk drive makers (the lawyers who bought Rodime's patents actually got tens of millions from Seagate long after the Rodime itself ceased doing anything useful in the world).
Then again, I haven't listened to the CC. Perhaps I will later on. But I would prefer to see lower ASPs for the next six months, getting all of the weak sisters out of the market. Sandisk has the cash to hang on, even if by fingernails. Cash in the bank right now is far far more important than any winning any write speed tests.
Sam |
