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  "docSlug": "8db914091b66",
  "documentTitle": "Spreadtrum Communications (SPRD)",
  "authorId": "51_Muddy_Waters",
  "authorName": "Carson Block",
  "documentKindSlug": "shareholder-letter",
  "documentKindLabel": "Shareholder letter",
  "sourceTypeSlug": "short_seller",
  "sourceTypeLabel": "Short seller",
  "presentationDate": "2011-06-28 00:00:00",
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  "notes": "This is a page from an activist investor letter (likely short-seller report) questioning management's capital allocation strategy.",
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      "text": "Per the below SAIC financials, MobilePeak generates virtually no revenue, has negative net income, and has negative operating cash flow.",
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      "text": "Net income: -3.3",
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      "kind": "paragraph",
      "text": "Per the below SAIC financials, MobilePeak generates virtually no revenue, has negative net income, and has negative operating cash flow. Management’s recent comment that it is “too early” to discuss MobilePeak’s customers indicates that MobilePeak’s current revenue is still de minimis.",
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      "kind": "paragraph",
      "text": "purchased only 48.44% of MobilePeak for $32.58 million. SPRD disclosed that it “intends to purchase” the remaining equity by the conclusion of Q3. As part of the initial purchase, SPRD loaned MobilePeak money to pay off its convertible bridge loan.",
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      "kind": "paragraph",
      "text": "MobilePeak’s investors include Sequoia, KPCB, and IDG, yet it was evidently left to SPRD to provide liquidity to MobilePeak to repay a loan. Given that MobilePeak’s shareholders chose to sell the company rather than provide it with liquidity, we infer that they doubt its potential.",
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      "kind": "paragraph",
      "text": "Is SPRD acquiring MobilePeak in two stages because MobilePeak had an urgent need for liquidity? Why is SPRD acquiring a company that evidently was unable to raise additional funds from its existing investors? Given that SPRD’s previous acquisition of Quorum Systems...",
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      "kind": "paragraph",
      "text": "IX. The increase in ADSes since going public implies that insiders have been selling shares at various times. We note that SPRD recently announced a share buyback of up to $100 million. Should we expect that shareholder funds will be used to purchase shares that insiders are selling?",
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      "kind": "source-note",
      "text": "Footnotes 6-9 detailing SEC filings, conference calls, and transaction details.",
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      "kind": "table",
      "text": "MobilePeak SAIC Financials table showing Revenue, Gross profit, Net income, Operating cash flow, and Cash used for investments for 2007-2009.",
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