Here is my take. First, VCD was reported at 1.7M units. I think 2M. Revenue at 95.5M, my low end is 103M. Where did these units go. VCD is strong in Asia. Those units are worth enough to make the difference. Sorry for not scaling back when we knew they wouldn't blow out the Q.
I have 5 pages of legal pad notes, and I type slow, so be patient. R&D was 16% of sales up from 15% last Q and up from 13% a few Q's ago. But margins have increased to 56% from around 52% last year. This is too good.
I have to repeat FredE. Inventories decreased 12% to 28.1M.
receivibles down 27% to 40.1M And average recipts are 38 days. Very healthy.
When the ESST question came up, Balkanski said," This is the C-CUBE Microsystems conference call. We will not talk about what other Companies are saying, we will talk about what C-Cube Microsystems is doing." Great come back.
Speaking of ESST, Alex also said in his prepared statement that due to new competition, the VCD market had been divided into two camps. One that supports the VCD 2.0 that CUBE introduced, and on that supports the audio cd add-on card version of it's major competitor. he thought that the market will move away from the add-in solution, but it would take time. He said that the Add-in could not decode all of the titles that were availible for VCD. This has already occurred. With current prices as low as 100-125 US dollars, he expected that CUBE's 2.0 is the only long term solution. He added that 2.0 gave a migration solution to DVD. The big quote from Alex, "We can compete on price with the best of them."
Alex also commented on the balance sheet. You know, the inventory and recievible numbers that the sorts have taken advantage of. He said it was an aberation.
He also said that he would announce all of the new Chinese design wins for the 680 chip in the next few weeks. The reason that they announced the two OEMs that they did, was because they were long term partners, and had helped create the VCD market.
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