2008 Annual Technology Conference, Credit Suisse:
Bertrand Cambou
9000 -> 4000 people. 5000 guys leaving are going to be part of a manufacturing company.
Lower break even point.
Cost reduction compared to last q by 100m. Shutting down factories, bonusses, etc...
Sell half of current 2.4B assets. Create JV's. Get cash injection. Like with announced ASC.
Downsizing R&D from 400m/y to 260m.
Cut SG&A.
Considering partner for Fab1.
Not relying on market share growth. Emphasizing new families of NOR products outside traditional. New cell phone architecture. Custom NAND for cell phone. ECO for search engine. Some already qualified. Significant deliveries of new products.
Licensing IP to hundreds of m/y. Some clients lined up. To be announced in a little bit. We think the entire industry is moving for charge trap, because new tech, phase change, isn't ready to move over charge trap till maybe 1016. Up to 100m/y business.
Single tech, single sell force, single manufacturing strategy. Grow into much bigger portions of cell phone market.
ECOram. Potention bigger than Spansion today. Multi B$. Alpha evaluated to multi OEM. Beta shipping. Order expected this month with rev probably q1 (project is 100m next year).
Summary: Move from in house commonity NOR to: fabless man. partner, high value solutions, licensing.
Dario Sacomani:
EBITDA improvement: 180m q4 in external manufacturing, 130m q1, 100m q2, lower q3. Represents move towards fab1.
This year focussed on liquidity. 1.5B debt. Amortization significant only in 2013 to 2016.
Q&A:
Bertrand: ECO is both for AMD and Intel architectures. It's software invisible. Only bios change. No redevelop of apps. 8x density. 8x less power. Sell at essentially same price as DRAM. Possible because of cost structure ECOram. We had 1TB of DIMM populating tens of oems. Some in US (Austin, and Bay), China, Japan. For them it's kind /of easy. Expand a much cheaper way. Q1: 50-15m, Q4: ~50m. Relatively easy because it's a replacement business.
Q: Look at bloomberg, and free cash flow numbers. Stock 20c. Bankruptcy is imminent. Are you running the company towards this event, to come out of it?
Dario: No. We always made cash flow from operations. Last year investment of 1.1B in fab1. This q 40m capital spend. In maintenance mode 30m/q starting q1. Liquidity definitely tight. So focussed on capex, cost and capital to get to point free cash flow from ops. With ramp up SP1 then significant cash flow from ops. Not our intention to go bankrupt.
Bertrand: We're selling assets. Progress with ASC; expect injection of cash. Cutting capital, ~150m less next year. Other facilties where we're making progress. Cutting spending. Reducing size team. And injections from selling assets. Selling at book value now; sell fractions of facilities now. Intention to get cheaper supply after the deal is done. ASC 100m, 50% cash, more assets coming in later. MOU done.
Dario: 4 back end facilities of 350m net. That's just back end.
Cash flow 216m last year with 128m investment in inventory. Same kind of sales level we should do at least that. I put it in that range. After cash flow from ops you're talking about covering 120m of DATAM?? and 115m of capex. Gives you an idea (well not with me).
Q: It's gonne be tight. Bertrand: No argument. Rev down. But the input cost down by 100m qoq. Not in plan analysts yet, because it is unheard of; we never did it before. This cost is what we can control. We do it as fast as we can. |
