It means plans of their own production plant is full steam-a-head. Once in place the new home in SH or a closer loacation where keeping staffing helps. Not a surprise when TSM was buying ... There was some clause in the contract to get out. This change though is very timely and is giving clues as to patant protected is calling the shots, as cost per unit, OVTI reaching, "Production"... no longer Fabless. Increasing Gross Margins and Net Income, Sales can be controled "Factory Direct"
thats the way i read it too. OVTI doesn't need new equipment now because their revenues are about to collapse and they are better off holding onto $32m to fund their losses in 2007. thats the way i see it no need for new equipment because their shit ain't selling like before and they did without it before.
So OVTI is constrained in the back end and customers prefer CSP, so OVTI in an effort to lock in CSP production tries to fatten the pipeline by investing in XenTec. Major announcement just about 8 weeks ago. Sooo in that time TSMC see's the writing on the wall and makes a play on XinTec to become the bigger fish. They tell OVTI to keep thier measely 30 million. Xintec has the capacity now and OVTi will still get a nice chunk of it. Hong says it's good, TSMC is clearly a strong partner. MY only question is what happened??? Is this a good thing for our cost control? Well yeah if TSMC/Xintec want to give us a good deal, which is possible. If not then we are giving up margins? I think OVTI got a good price from firm partners and this is good.
or We get fucked again and OVTI has demostrated they don't know what the fuck they are doing. I guess the market will tell us tommorow before any of us can do a dam about it.
The market already told us that the planned capex by OVTI was detrimental to the Company. Now is it going to tell us that the unwinding of the deal is bad? The announcement creates uncertainty which the shorts should fear more than the longs right now. I will be putting my buy orders in place in the morning if the MM's try to bring OVTI's price down. OVTI's cash flow statement is going to look good this quarter. Having this announcement being made by the end of the month of January is interesting indeed.