I think they are trying to get something from nChip purchase.
Marks has already admitted that they overpaid for nChip, they sold the nChip board fab recently, and I think Marks has realized that he doesn't want to invest a lot of money developing these new products. So he has done the smart thing and teamed up with Dow. I suspect Flextronics is mostly contributing the technology and people to this effort, with only some monies, Dow will contribute some manufacturing expertise, and the lion share of the monies.
This strategy does fit with Flextronics business model, where they are trying to become the ECM expert on miniature electronic devices. by embedding resistors, and capacitors and such, into the boards, it could be possible to make some very small electronic devices. But of course the new company will have to go after the whole market, because Flextronics itself will only be a fraction of the market.
Bottom line, I expect we see some expensive engineering talent costs leave Flextronics income statement and move to the new company's statement. So we should see a positive impact on G&A or R&D. I wonder though whether there will be a write-off? I don't think so, but we might.
I'd need more time to analyze this in detail, but this is my first pass at it.
Paul |
