Carl, another interesting thing is that if the margins on the JV goods were lower than MU's fully-owned ops., we probably have a better understanding of why the whisper number was so high.
For example, there was that guy in TSC who would be "very surprised" if they didn't make .20. He was also the same guy a few months earlier claiming their GM's would be 35-40%
I think Niles had their GM's coming in around 35%.
Could it be that when MU was giving "guidance" re: their GM's they forgot to mention the effect of the JV's on their margins (i.e. they may have been referring only to their fully-owned ops.) as well as a rough percentage breakdown of goods purchased from the JV's v. those produced themselves.
I still don't understand how the "whisper number" is derived at, but in this case, if you assume "guidance" played a role, specifically "guidance" on GM's, here's how last Q looks if you go back an plug-in some of the above GM assumptions that were being bandied about to the consolidated IS:
35.0% = .164
35.5% = .177
36.0% = .191
36.5% = .204 (DING!)
37.0% = .217
37.5% = .231
38.0% = .244
38.5% = .257
39.0% = .270
39.5% = .283
40.0% = .296
Also, I guess to do the full monty on reverse engineering the whisper number (is this nuts or what?) you'd also have to go back and look at the bit shipment assumptions pre-earnings as well (maybe take a range of around 50-70%)
But I guess one possible lesson here is that in the event that "guidance" is given re: GM's, make sure you ask what GM's they are referring to.
Then again, what's that they say about not asking a question you don't want to hear the answer to? <g>
Good trading,
Tom |
