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Technology Stocks : Spansion Inc. -- Ignore unavailable to you. Want to Upgrade?

To: BUGGI-WO who wrote (3104)	1/19/2008 9:18:54 AM
From: bobs10	Respond to of 4590

Morningstar: We believe gross and operating margins will improve from present levels as depreciation related to heavy capital expenditures works itself off the income statement and research and administrative efficiencies are realized. Under our assumptions, Spansion will break even in 2008 and turn profitable in 2009 on an operational level. These assumptions generate returns on invested capital that reach a maximum of 9% in 2011, less than our assumed 11% cost of equity. We forecast an operating loss of more than 6% in 2007 as a result of tough operating conditions. This assumption turns the value of Spansion's cash flows over the next five years negative, meaning the total estimated worth of the firm comes after our forecast period ends in 2011. me: Not exactly a sterling endorsement, but certainly a lot more reasonable evaluation than what the market is currently giving SPSN. Personally, I think they're being a little too pessimistic. Market share and profitably are going up a lot more than their estimates as everyone else in the NOR business is going to find that the old ways of doing business are not working under the twin onslaughts of MirrorBit technology and 65nm/300mm SPSN capacity. And that says nothing about the competitiveness of MirrorBit as an alternative to NAND in some applications. Having, what I think, is the leading edge NVM technology will open a lot of markets to SPSN that aren't visible right now. When I consider investing in a company the first thing I look at is management. So far, in that regard, I've seen nothing from SPSN's management that would make me think that trust was misplaced. SPSN is in a very difficult business, but from my point of view most of the blood letting has already occurred.