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Technology Stocks : CRUS: Can they restore investors' confidence?
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To: Robert Talty who wrote (11)1/27/1997 7:57:00 PM
From: Gary Burton   of 23
 
It is somewhat misleading to focus on gross margin thinness. The Micrus deal being take or pay is in effect an off balance sheet debt whereby there is an imputed interest charge of building the plant and this is passed on to CRUS via adding to their required purchase cost----if they had done on balance sheet financing in the first place the gross margin would be higher but there then be an interest charge on the p&l. The real problem was that CRUS failed to do an equity issue when the stock was in the clouds and they have been paying for that ever since via reduced financial flexibility---ergo the need to load up on off balance sheet deals. Which is why many view CRUS as a 'debt' heavy company
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