One day I'll understand how Hara gets away with revealing so much non-public info privately to stock buyers/owners... heh.
The thing I have learned from talking to stock analysts is that they all know the rules and most respect them. Several don't though, and they know they can get away with almost anything. One lawyer I talked to about it said RegFD is basically ignored by the SEC now, a sad state of affairs.
Of all the companies that I talk to, only NV consistently violates this practice, others may slip, but NV seems to do it as practice, playing favorites with analysts. If the IR department ever gets subpoenaed, they are in deep deep deep shit.
While in theory that makes absolutely perfect sense, I still look forward to you making a sufficiently specific prediction in your articles that it can be clearly said afterwards whether you were right or wrong (e.g. your claim that NV would leave the MCP business
just kidding!)
NV _IS_ out of the MCP business, mainly because chipsets are not going to exist in a year or so. Stop and think about it, what is a chipset? It is, classically, a memory controller, GPU, SATA, USB, PCIe, low speed IO, and a boot rom.
Of that list, memory controller and GPU are the difficult ones, the rest are trivially licensable IP. MC and GPU are gone in a year, and will never come back, PCIe, probably the next hardest one, is going on die shortly. So, do you think NV can make margins necessary to build a SATA, USB and boot ROM chip? Even if they call it XRP or something stupid? Chipsets are dead dead dead. The end.
For example, Hara claimed in their latest CC (at the JPMorgan conference, I think it's still archived fwiw) that they would definitely increase their notebook marketshare in the Calpella cycle based on the design wins they have secured for their 40nm chips. Would you be willing to publicly claim bullshit on that? And if so, what do you think is the dynamic that Hara is missing?
Would you care to define "notebook marketshare based on design wins"? Does that mean notebook designs or chip sales, the two are not mutually inclusive. Dell is worth more than Eurocomm, but both are a design win.
That said, given that notebook design cycles are much longer than desktops, I think notebooks will lag desktops by about a year in any changes. Also, desktops change every quarter, notebooks once a year. I don't expect the changes to be public until the 2010 round of notebooks.
Wow. That's... bad. I could honestly believe that science sometimes does lag reality in packaging, but it's hard not to be infinitely skeptical given your second paragraph.
Well, FWIW I'm not sure that contradicts my random idea above. Let's say that the thermal cycling that the packaging experts describe *is* a major problem, and it'd make the defect rate jump from 2% to 5% as I said. But then, in ADDITION to that, a specific temperature range increases it to 25%. NV can't admit that basically all their parts, no matter what you do, have a failure rate that's noticeably higher than it should be. You can't get away from that later in a lawsuit.
However it doesn't exclude the possibility that there are actually two problems (and maybe it's not 2->5->25, but rather 2->10->20 or anything that'd make the first problem more important; as I said, I have no idea and these are just made up numbers). Unless the packaging experts know every technical detail *and* the precise failure rate info, they couldn't be 100% sure - of course, I do agree it's still more likely that NV is just being either retarded or trying to pass as retarded.
If you look at the graphs I put in my article, the Namics U8439-1 underfill loses more than 2 orders of magnitude of stiffness between about 60-80C. What temps do GPUs run at? What temp do you think the non-cooled underside of the GPU is at? All it needs to do is hit 6x degrees, and you are hosed. The
Hara is trying to skillfully bend the science, basically if you stay below Tg, you are OK, but no GPU in use will, fan or no fan. If you go above the Tg (80 C or so) it doesn't get noticeably weaker, so it isn't WORSE. He is trying to explain that while pretending they don't understand, and science hasn't caught up with 'melting' yet. (Yes, technically it isn't melting, it is glassification, but still....)
I agree that fix is bullshit, but out of curiosity are they really legally obligated to do a recall? Certainly it'd seem normal for OEM relationships to deteriorate otherwise, but that's a separate issue.
Well, I don't think I need to answer that - but *if* you're right and admitting to the full scale of the problem would nearly kill them, do you *honestly* believe that any other company or any other management team in the exact same situation wouldn't do something very similar? It'd be quite normal to feel outraged, just try not to look too surprised.
Well, assuming dell gets roughly what HP does, that means $10M/$150 ~= 67K. If you read the suit, you would see that it isn't a total payment, just a down payment in effect. So that means 67K notebooks in the initial batch. How many do you think were sold? I think the $150K number is way low, it was early on, and HP will come after more when they learn how much NV knew.
So, if you assume the $10M is an initial payment with more to come, and I have good reason to believe this is true, but I can't expound on that, lets just assume it will be double, so $20M to dell. If Dell is about 20% of the market, that would be $100M to cover the entire market. NV set aside $200M, so my estimates are low.
If that is $150/unit, how much do you think it would cost to do a recall, and replace those notebooks. Think $1000/unit average is fair? Plus $200 for costs/handling/phone support/logistics? (this isn't a high number from what I am told, phone tech support calls are $35 or so in cost each). That would mean 8 * 100M there.
Then there are the suits. Keep in mind, there are product liability suits with damage multipliers, shareholder/SEC violation suits, there will inevitably be more shareholder suits when discovery happens (Trust me, I know where the bodies are buried here, I just don't have the docs in my hands). This will add up, not to mention money and executive time sucked up by stupidities and depositions.
NV is wounded now, they are facing down *3* lawsuits that I am aware of, and they have pissed off everyone in the industry. To me, that is mismanagement, but is that a shock to anyone who follows the company? I have said for a few years that if you are are arrogant pricks when you are on top, people grin and bear it, but will line up to put the boot in when you fall. If you stay arrogant, they will only get back in line once they have had their turn.
NV is covering up tons of stuff. They are mismanaged. They are arrogant pricks. They are on the bottom. The line stretches to the horizon, and they won't get up from this.
-Charlie
