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Technology Stocks : JDS Uniphase (JDSU) -- Ignore unavailable to you. Want to Upgrade?

To: Selectric II who wrote (23187)	12/14/2002 2:56:24 PM
From: ownstock	Respond to of 24042

Selectric: The basic idea is to reduce your burn rate so you can return to profitability. This is very hard to do, depending on how much of your costs are fixed, and how much are variable. Employees and materials are the big ones. Buildings and equipment tend to get written off (sold, dumped, etc). Since this does not cost cash, it might APPEAR like it is not a big deal, but it really enables COMPETITION from smaller companies starting up. They buy the equipment at 1-10% of the original cost, and end up with the latest equipment, higher capacity and much much lower overhead. In a lot of cases, dumping of buildings only ends up saving utilities costs, as the landlord gets a lump sum for early termination. And the smaller companies benefit: they rent the buildings at much lower costs and do not have to invest in building improvement. All the large fiber optic equipment and component companies are in this predicament. In order to save themselves, the big companies will have to spend the bulk of their cash as follows: 1) Downsizing, reorganizing and consolidating (getting smaller) 2) Cutting prices below GAAP cost to stave off smaller competitors with lower GAAP overheads and costs, thus burning more cash 3) Create new products...burn more cash. 4) Do all this without losing any more of their best and brightest Syrus estimated the GAAP costs associated with step 1 above to be half their remaining cash. I estimate that step two and three could cost the other half. The best and brightest have already gone. Flash: I just heard (from a very good source) that Don and Jozef have their terminal dates...thanks to Syrus. Syrus is a fool. But then, with the factors above, what manager with an ounce of brains would go to work for either JDSU or BKHM at this time...??? JMHO -Own