Ken,
I laud your effort to try and put a clearer perspective on this mess.
Since you have been in this industry for some 20 years can you tell
how distributors are rewarded/paid?
Mind you, the distributors are in a no-lose situation. Whatever they
can't sell they can return. It is risk-free. So depending on how they
get their margin they may have unilaterally decided to order more since
there is no risk.
Why would they do so? Could be that sales were falling off or non-current
inventory or numerous things. I would argue if it were non-current inventory
they could easily and readily return it. Falling sales would point though to
a deeper problem.
There are many Harvard Business School Case Studies dealing with these
type of problems. Invariably problems teden to emerge when sales fall or
the growth rate declines and distributors are faxed with reduced income.
I am not advocating that the distributors are or were the problem, but
the issue at hand may be a little more complex than it may appear on the
surface and than many on this thread would like us to believe.
There are a great deal of firm statements, accusations, wild assumptions
and so on. In my opinion, these are all conjecture and pure speculation.
Where I do concur is that, given the nature of distributing product and
based on how the various levels derive their income, a more vigilant
management would have been able to nip this problem in the bud.
That's why I do see a need for change at the top, both at the executive
level and on the Board. With the current composition of the Board it is
unlikely that the insider directors will make a hard decision that would
affect their own job. Should the outside directors turn out to be close
personal friends of Banatao, and chances are they are indeed, then you do
have your "perfect" rubber stamp Board ready for SNL's "perfect cheer."
I noticed on another post that today's low volume today is explained as
a confirmation of the market's apprehension of current management. Perhaps,
perhaps not. One could equally well argue that the pool of willing sellers
at current levels is about to dry up, and if so, what would that suggest?
Mind you, we are not having a very strong hi-tech market these days either.
Bill Lin remarked $4 may be possible. He may be right, but if that happens
and I were in the 3D business I would be very tempted to take a shot at the
whole deal. Why? It cost an awful lot more to build a business, the size of
S3, with a market share, like S3, with the human resources, like S3, and be
off and running instantaneously. Even if money would not be an issue, I would
argue it would take considerable time to attain such a position.
What is easier than to buy S3 and just replace management? I don't think
I would have too much of an argument that, at least our perception and
likely that of the market at large, the current problems lie mainly with
management and its reponsiveness to the dynamics to the market. They may well
be good in most environments, just not good enough in this one.
JMHO
Jan
There may be some typos, so forgive me but they keep bugging me to get
get off the net. |
