Hi Bilow, inventory write-down argument still holds.
"In other words, during Micron's quarter, DRAM dropped from $33.20 to $16.60, a reduction of $16.60 per unit. ... During Infineon's quarter, DRAM dropped from $18.80 to $14.80, a loss of $4 per unit."
- True, but also irrelevant. GAAP says: "Market, as applied to the valuations of inventories, means the current bid price *at the balance sheet date for the inventory* in the volume for which it is usually purchased in." (* emphasis added)
- So, MU has to write down to $16.60, IFX has to write down to $14.80.
- Both are writing down not from a previous market price but from their cost basis (which is why the inventory write-down can be used for the argument in the first place).
- So, it is irrelevant for the argument what the price at the start of the period was or how much it has dropped over the period.
This inventory write-down still puzzles me. Only thing I can think of is that MU actually held a lot more inventory as % of sales at the time of the write-down than IFX.
Ulf |
