Mike,
Just for argument sake, what would happen to spsn if they never make a profit, but have a positive cashflow.
In the long run you cannot really have a positive cash flow and not be profitable, because the depreciation is going to be done eventually. For the next 3 to 5 years, Spansion is going to depreciate a fairly big capital expense in SP1, which affects the income statement.
In theory it should not affect their cash position, but the value of the company will go down due to depreciation.
The book value eventually goes down, if no capital addition take place. But we are trading so far below book value that we don't need to concern ourselves that much with it.
what will happen when they have to start paying their long term debts, if they are not making any money by then, spsn cant do nothing but go bankrupt.
Some portions of long term debt become current debt. Cash flow (positive or negative) includes these payments. As far as some recent presentations, there is not that much debt that is due before 2013 (IIRC).
Joe |
