Pam,
The deterioration in area of GAAP earnings and cash, interest income and expense are a direct consequence of bringing a new Fab online. Without SP1, both would have been much different.
Unless pricing in NOR and the market opportunity gets bigger, SPSN will die a slow painful death! They are barely profitable at GM levels after reduction of R&D expenses and since the industry is in oversupply, pricing is unlikely to improve and competition will be fierce with a question of survival for key players.
Well, SP1 investment happened in order to insure long term viability for Spansion.
As far as competition, the competitive position of Numonyx is deteriorating from quarter to quarter. The last official stats show both Numonyx and Spansion at roughly 33%, with Numonyx maybe 1% higher. Their latest plan to use Elpida as a foundry with output at 65nm a year from now just shows their weakness. They have no cash to equip their empty fab shell.
Where Numonyx will be at a year from now is where Spansion was a year or 2 years ago (ramping output at TSMC foundry, getting rid of obsolete capacity, planning on equipping their own 300mm fab).
IMO, it is Numonyx who will die a slow painful death, with Spansion in position to pick up some of the pieces.
Joe |
