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

To: Rink who wrote (4110)	9/5/2008 4:09:51 AM
From: BUGGI-WO	Respond to of 4590

@Rink - JV1/2 A good explanation. With Fuji they have contracts to sell JV1/2 products, thats clear, we had to look into 10Qs for details, but I could also imagine, that they have some kind of contract with TSMC too. I don't know, if this is common sense (I assume not) - but who knows. In the end, its the most important benefit for a foundry and the customer, that the customer could send an "halt" signal when demand isn't in the region, where it should be. So doing deals with foundry should always imply some way of flexibility, the more the better. What I would do these days? A "problem" for Spansion are the big inventories. It was kind of frustrating to hear, that even with these high inventories, they weren't able to deliver all necessary products to customers. The have to work much harder to fix this problem - thats clear. In the end, they could "easily" reduce inventory by 200-300Mio. and still should be in good and healthy shape. When I look at Intel, they have around 1/3 of Revs in inventory, so for Spansion this would mean around 660/3 => 220Mio. vs. 636Mio. up to date => I wouldn't go that far, that these levels are appr., but (as said) 200-300mio. off would be nice and healthy. If we assume, that 100Mio. will come from a foundry side, they could stop foundry shipments easily for 2 quarters with own production unchanged and revs. around our existing situation. Why not doing this? In this time, you could plan next foundry steps, e.g. newer designs and/or a more advanced process => 45/55/65nm. There are so many choices. It should be clear too, that the inventory will be less worth as time goes by, so the more you could instantly sell, the less degr. will appear in sum. Also you have to pay less, which is healthy for the cash situation. Products in house are already produced, but SPSN hasn't seen a single penny for them, but costs already appeared. Make sure you get REAL MONEY for these products! BUGGI