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  "documentTitle": "Spreadtrum Communications (SPRD)",
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  "authorName": "Carson Block",
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  "presentationDate": "2011-06-28 00:00:00",
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  "notes": "This is a page from a short-seller report or activist investor letter questioning accounting practices.",
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      "text": "We believe that having enormous simultaneous increases in advances from customers and deferred costs is implausible.",
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      "text": "inventory turns: 1.46x",
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      "text": "VII. Among the accounts shown in the prior question, we are most concerned about the increases in inventory (especially the deferred cost sub-account) and advances from customers. We believe that having enormous simultaneous increases in advances from customers and deferred costs is implausible.",
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      "kind": "paragraph",
      "text": "VIII. We question the wisdom of paying $32.58 million for a 48.44% stake in MobilePeak, which appears to be a distressed company.",
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      "kind": "paragraph",
      "text": "As a general matter, can you explain why the size (in absolute value terms) of each of these accounts is much larger than in the past? What processes did the auditors undertake to confirm the sizes of each of these accounts?",
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      "kind": "paragraph",
      "text": "MobilePeak appears to be a distressed company that had an urgent need for liquidity. Rather than completing this acquisition in one step, SPRD",
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      "text": "Why have each of advances from customers and deferred cost become so significant?",
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      "text": "A blogger recently stated that SPRD's new clients are being given up to 90 days to inspect the chips because SPRD is a new supplier, which is the reason for the deferred cost. If SPRD agrees with that assessment, we are a bit perplexed as to how SPRD would maintain good relationships with its existing clients – presumably they would be unhappy with the preferential treatment being given to new clients. We note that MediaTek has no deferred cost account, and thus does not appear to extend this policy. The rationale that new customers want the inspection period because SPRD is a new supplier also strikes us as odd because SPRD and its main competitor MediaTek are fabless semiconductor companies. SPRD's chips are assembled by TSMC. Supplier-specific product defects would therefore be more likely due to design issues than manufacturing, and SPRD's 20-F indicates that clients test the designs before ordering.",
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      "kind": "source-note",
      "text": "4 http://seekingalpha.com/article/276318-spreadtrum-compelling-value-after-broad-chinese-stock-sell-off\n5 SPRD 2010 20-F, p. 11.",
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      "text": "SPRD Key Balance Sheet Accounts",
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