Pam,
Profitability is a nice long term goal, but short term goal for the NOR players is just to stay in business, which is have enough cash to continue business. That's the goal of Numonyx (while making minimal or no CapEx investments), and also for Spansion (while making significant investments for the future).
Numonyx is banking on raising some capital in the IPO, but it seems like a very distant goal. The problems with valuations etc. are just a reflection of what PE firm thinks of a probability of a successful IPO.
The problems closing the deal just postpones the beginning of the preparation for IPO.
When the deal closes, all the attention changes to extracting the highest amount of money from the IPO, for PE to get paid, and some leftover money for CapEx.
I think the probability of the deal closing withing next 3 months is only about 80%. Then, knowing where I think Numonyx will be 12 to 18 months after PE deal, probability of successful of IPO is no better than 50%.
So even if things go perfectly (and I assigned 40% probability of that), Numonyx will be cash starved for 18 to 24 months. I think it is pretty clear what the consequences of such delay will be...
Joe |
