Mike,
So even they lost about another $100 Million in 3Q, they should still have about $300 million left, which should keep spsn alive for 3 more Qs,
Cash levels and GAAP earnings are two very different things:
Cash levels are affected by cash from operations (increase) and capital spending (decrease). Spansion has been (in total) cash flow negative because of the expenses equipping SP1 fab. But that is done now, and IIRC, Spansion is expecting to be cash flow neutral this Q (still some Cap Expenses are anticipated) and cash flow positive in Q4 (Capital expenses will go down further, more cash from operations expected).
GAAP earnings are basically cash earnings from operations (increase), sales + management overhead (decrease) and depreciation of existing fabs (decrease). A big figure here, that affects GAAP earnings, is depreciation. Since Spansion put an expensive factory online, the depreciation figure is relatively high.
Depreciation component of the GAAP earnings in not cash. So even if Spansion "loses" 300M in next 3 quarters, it may end up with actually higher cash level.
At this point, what we need to look at is cash flow, if it is positive or negative. It would be great news if Spansion's Q3 was cash flow positive - which may not happen, but as far as last statements, Spansion was on trajectory to be cash flow positive in Q4, which will need to be emphesized...
Joe |
