Pan,
That may very well be true but it is irrelevant because SP1 has also added significant amount of debt to SPSN's B/S and makes it harder to be profitable going forward! Valuation is based on generation of future CF's. They have 1.341B in LTD which is carrying interest, irrespective of whether SPSN makes money or not. They also have huge Short term liabilities (approx. 274MM: RC + Curr portion of LTD) which needs to be paid within a year and not to mention some of the operations that are financed by A/Payables! The difference between A/P and A/R is about 323MM! SPSNs CF's are being fed to their huge debt holders not to shareholders equity!!
Dario indicated that AP will remain about the same in q3 and drop in Q4. They were able to obtain favorable terms, which is one part of cash management strategy, when you are at the low point in cash (having completed a large fab, with revenues just starting to trickle in).
As far as interest, according to Dario, the level we saw last Q is it for a while, it is going to stay at that level, which is acceptable.
Gross Profit for H2 according to guidance should be $132M per Q (on average) compared to 109M in Q2.
SPSN is trying to evolve themselves and that is a good thing but outlook for NOR business is not looking good to me. It is stagnant for SPSN and declining overall. The problem is SPSN is running out of Cash in the short term.
During CC, they said they are going to be cash flow positive in H2. CapEx is what was draining the cash, and it has slowed down.
Numonyx is a private company, so I have very little information about their capital structure. One thing I do remember is that they do not have the kind of debt that SPSN carries (from news items) although they may lack 300mm o/p and leading edge technology
With pricing where it is, you have to have to be the lowest cost producer to have a chance. The cost competitive situation of Numonyx is slipping rapidly.
In any case, SPSN's main competition in the future will be come from Samsung and not Numonyx. Samsung's product line is broad and they sell bundled products at competitive prices which are hard to ignore even for their competitors!
Yup. In not too distant future, I think Samsung will become #2. In 12 to 18 months, my prediction is that market share will be:
40% Spansion
25% Samsung
25% Numonyx
Joe |
