The problems with VCD, and where did all that DVD revenue come from?
VCD revenues were under $26M this Q. Last Q, $30M. Why?
1) Product transition to a new format. To change over, they run down inventories, and then shut down the line. It's a decrease in sales in the Q that it occurs in.
2) C-Cube most likely needed to take reserves this Q, for the CVD chips that they have already shipped. Now that they are supporting SVCD, they will need to up-grade their OEMs, chips and machines, to support the format. They will pay royalties to China.
3) This is important, Chinese New Year is 19 days later this year. The New Years ramp started in late August last year. Later this year.
4) China's economy has slowed, but in the last 2 months, we have seen an upturn. The Asia problem has their caused China's exports to only grow at a slow pace. The flood, lay-offs from State owned firms
5) Alex says consumer confusion.
Alex's comment that C-Cube will not seek to maximize it's China revenue signals, "No more VCD Price Wars".
DVD was about $7M this Q. Last Q, it was $3M. For the Qs before that, DVD was $3M. It finnally started to move. C-Cube should see a similar move up next Q. This number includes both DVD players and DVD-ROM. |
