{
  "docId": "019dd923-622c-750b-8b96-7f2e60571091",
  "docSlug": "9e3d3c9dc613",
  "documentTitle": "Nidec Corp. (6594 JP)",
  "authorId": "51_Muddy_Waters",
  "authorName": "Carson C. Block",
  "documentKindSlug": "research-note",
  "documentKindLabel": "Research note",
  "sourceTypeSlug": "short_seller",
  "sourceTypeLabel": "Short seller",
  "presentationDate": "2016-12-13 00:00:00",
  "orientation": "portrait",
  "aspectRatio": 0.77272725,
  "pageNumber": 17,
  "pageCount": 54,
  "prevPage": 16,
  "nextPage": 18,
  "slideType": "expose_contradiction",
  "function": "expose_contradiction",
  "density": "overcrowded",
  "nDataPoints": 20,
  "notes": "The slide uses a forensic accounting approach to challenge the validity of financial write-offs.",
  "elementsJson": [
    "paragraph",
    "data_table",
    "footnote"
  ],
  "metadataConfidence": 1,
  "imagePath": null,
  "slideHref": "/slides/019dd923-622c-750b-8b96-7f2e60571091/17",
  "deckHref": "/decks/019dd923-622c-750b-8b96-7f2e60571091",
  "deckJsonHref": "/decks/019dd923-622c-750b-8b96-7f2e60571091.json",
  "deckAnchorHref": "/decks/019dd923-622c-750b-8b96-7f2e60571091#slide-17",
  "components": [
    {
      "bbox": null,
      "kind": "callout",
      "text": "We believe Nidec's inventory write-offs were largely unjustified for the following reasons:",
      "attrs": null,
      "subkind": null,
      "toolName": "Visual emphasis",
      "toolSlug": "visual-emphasis",
      "confidence": null,
      "componentId": "019dd953-203f-7169-9f8b-9cf0d5db9dac",
      "frameworkName": null,
      "frameworkSlug": null
    },
    {
      "bbox": {
        "h": 0.22,
        "w": 0.72,
        "x": 0.14,
        "y": 0.14
      },
      "kind": "list",
      "text": "a) The magnitude of the estimated write-off seems too large relative to Nidec's Q3 FY2012 and Q4 FY2012 inventory balances to be believable...",
      "attrs": null,
      "subkind": "bullet",
      "toolName": null,
      "toolSlug": null,
      "confidence": null,
      "componentId": "65cbec7b-6166-4cf4-b3b4-40ec2ca2dfb6",
      "frameworkName": null,
      "frameworkSlug": null
    },
    {
      "bbox": {
        "h": 0.04,
        "w": 0.72,
        "x": 0.14,
        "y": 0.64
      },
      "kind": "list",
      "text": "c) As excerpted below, Management's FY 2012 statements also make us strongly doubt there was significant inventory (as well as PP&E) that met the criteria for write-off.",
      "attrs": null,
      "subkind": "bullet",
      "toolName": null,
      "toolSlug": null,
      "confidence": null,
      "componentId": "666552a2-e55f-476d-a03b-0448d607cac5",
      "frameworkName": null,
      "frameworkSlug": null
    },
    {
      "bbox": {
        "h": 0.12,
        "w": 0.72,
        "x": 0.14,
        "y": 0.38
      },
      "kind": "list",
      "text": "b) As shown below, no single sub-account of inventory changed materially QoQ during the periods preceding the write-offs and the quarter in which they were taken.",
      "attrs": null,
      "subkind": "bullet",
      "toolName": null,
      "toolSlug": null,
      "confidence": null,
      "componentId": "8bab545f-f7c9-49b5-91f2-a3ec4877f01b",
      "frameworkName": null,
      "frameworkSlug": null
    },
    {
      "bbox": null,
      "kind": "metric",
      "text": "inventory balance: 22%",
      "attrs": null,
      "subkind": "primary",
      "toolName": "Quantification",
      "toolSlug": "quantification",
      "confidence": null,
      "componentId": "019dd953-203f-7169-9f8b-a5b69a2495b0",
      "frameworkName": null,
      "frameworkSlug": null
    },
    {
      "bbox": {
        "h": 0.05,
        "w": 0.68,
        "x": 0.18,
        "y": 0.69
      },
      "kind": "paragraph",
      "text": "In Q1 2012, Mr. Nagamori stated that HDD prices will not continue to steadily decline, that it is a “very healthy market”, and that neither Nidec nor its customers have excess inventory.",
      "attrs": null,
      "subkind": "paragraph",
      "toolName": null,
      "toolSlug": null,
      "confidence": null,
      "componentId": "27ad2f69-a66f-49c4-bd27-5b1080a75137",
      "frameworkName": null,
      "frameworkSlug": null
    },
    {
      "bbox": {
        "h": 0.04,
        "w": 0.72,
        "x": 0.14,
        "y": 0.09
      },
      "kind": "paragraph",
      "text": "GAAP, a drop in selling price does not in and of itself necessitate a write-off. We believe Nidec's inventory write-offs were largely unjustified for the following reasons:",
      "attrs": null,
      "subkind": "paragraph",
      "toolName": null,
      "toolSlug": null,
      "confidence": null,
      "componentId": "6aff819a-602f-477f-9485-f6351049d3c5",
      "frameworkName": null,
      "frameworkSlug": null
    },
    {
      "bbox": null,
      "kind": "quote",
      "text": "In Q1 2012, Mr. Nagamori stated that HDD prices will not continue to steadily decline, that it is a “very healthy market”, and that neither Nidec nor its customers have excess inventory.",
      "attrs": null,
      "subkind": null,
      "toolName": "Authority citation",
      "toolSlug": "authority-citation",
      "confidence": null,
      "componentId": "019dd953-203f-7169-9f8b-a29c3ae61124",
      "frameworkName": null,
      "frameworkSlug": null
    },
    {
      "bbox": {
        "h": 0.12,
        "w": 0.72,
        "x": 0.14,
        "y": 0.79
      },
      "kind": "source-note",
      "text": "Footnotes 34-39 detailing sources and accounting standards.",
      "attrs": null,
      "subkind": null,
      "toolName": null,
      "toolSlug": null,
      "confidence": null,
      "componentId": "a2976e0f-4bef-491b-b2d9-97b56ebd5f52",
      "frameworkName": null,
      "frameworkSlug": null
    },
    {
      "bbox": {
        "h": 0.11,
        "w": 0.72,
        "x": 0.14,
        "y": 0.51
      },
      "kind": "table",
      "text": "Inventory sub-account data table showing Work in Progress, Raw Material, Finished Good, Projects in Progress, Supplies and Other, and Total Inventory across four quarters.",
      "attrs": null,
      "subkind": "data",
      "toolName": null,
      "toolSlug": null,
      "confidence": null,
      "componentId": "bfca88c5-97d4-48c8-9a06-33db2f9b0a6e",
      "frameworkName": null,
      "frameworkSlug": null
    }
  ],
  "metrics": [],
  "tools": [],
  "frameworks": [
    {
      "name": "fraud-exposure",
      "slug": null,
      "matchId": "bbaabbbf-12eb-44a4-ac7b-140b84e536a9",
      "evidence": "The slide systematically deconstructs financial statements to argue that write-offs were unjustified.",
      "confidence": 0.9
    }
  ],
  "arcBeats": [
    {
      "to": 24,
      "from": 10,
      "beatId": "7d2a5d2a-519d-487d-8292-a3ffbf5fc2c0",
      "arcName": "Overcoming the Monster",
      "arcSlug": "overcoming-monster",
      "beatName": "The Struggle",
      "beatSlug": "overcoming-monster-the-struggle",
      "evidence": "The document presents evidence of Nidec's questionable practices, including write-offs and revenue recognition issues.",
      "position": 1,
      "confidence": 0.8,
      "parentBeatName": "Development",
      "parentBeatSlug": "development"
    }
  ],
  "loops": [
    {
      "to": 24,
      "from": 10,
      "name": "The Reveal",
      "slug": "05-the-reveal",
      "bestFor": "Product launches, strategic pivots, unexpected findings",
      "matchId": "a79f950c-a0c5-47f8-a5c9-2a653d5764bc",
      "evidence": "The document presents several examples of Nidec's questionable practices, including write-offs and revenue recognition issues.",
      "position": 0,
      "objective": "To reveal Nidec's questionable financial practices and reporting",
      "structure": "Setup the Question -> Build Suspense -> The Big Reveal",
      "confidence": 0.8,
      "description": "Build mystery and anticipation, then deliver a surprising or powerful conclusion"
    }
  ],
  "imagePathAlt": null,
  "thumbSrc": null,
  "thumbSrcAlt": null,
  "locked": true
}