{ "docId": "019dd923-622c-750b-8b9a-0f4bec37392f", "docSlug": "f982379e2e48", "documentTitle": "Lasertec Corporation (6920)", "authorId": "58_Scorpion_Capital", "authorName": "Scorpion Capital", "documentKindSlug": "activist-deck", "documentKindLabel": "Activist deck", "sourceTypeSlug": "short_seller", "sourceTypeLabel": "Short seller", "presentationDate": "2024-06-05 00:00:00", "orientation": "landscape", "aspectRatio": 1.3333334, "pageNumber": 247, "pageCount": 334, "prevPage": 246, "nextPage": 248, "slideType": "expose_contradiction", "function": "expose_contradiction", "density": "dense", "nDataPoints": 0, "notes": "The slide uses a Q&A format to build a case for accounting manipulation.", "elementsJson": [ "paragraph", "quote_block" ], "metadataConfidence": 1, "imagePath": null, "slideHref": "/slides/019dd923-622c-750b-8b9a-0f4bec37392f/247", "deckHref": "/decks/019dd923-622c-750b-8b9a-0f4bec37392f", "deckJsonHref": "/decks/019dd923-622c-750b-8b9a-0f4bec37392f.json", "deckAnchorHref": "/decks/019dd923-622c-750b-8b9a-0f4bec37392f#slide-247", "components": [ { "bbox": null, "kind": "callout", "text": "The senior employee noted that inventory mis-valuation in the semiconductor equipment industry “is a common thing, unfortunately, that I’ve seen across multiple companies in the space...to manipulate earnings: “they defer out...that impairment...because they don’t want to record a hit on their gross margin.”", "attrs": null, "subkind": null, "toolName": "Visual emphasis", "toolSlug": "visual-emphasis", "confidence": null, "componentId": "019dd953-78b7-702e-961a-6ac7d4f3bc26", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.35, "w": 0.86, "x": 0.07, "y": 0.39 }, "kind": "paragraph", "text": "Swap for A150 implies existing inventory of A150's has almost no value\nQ: “When they said swap, what did they mean? You don’t have to pay for it? Or you trade it in?”\nA: “So, they would take back the A150 and then they would give us an A300 at a reduced price from the retail price.”\nQ: “And did they say what the price is and what the discounted price might be?”\nA: “That I can’t speak on because I think those are confidential terms. I can just speak to the fact that what they were offering was to take the A150 back and give us an A300 and essentially give us a discounted value based on us returning the A150.”\nQ: “The swap thing is weird. How is there any trade-in value from that? It just makes no sense to me.”\nA: “Well, semiconductor equipment as a whole has a very high depreciation rate. The machine that we already have is almost around three years old, so they factored in the depreciation. Again, semiconductor equipment overall depreciates very quickly and so that’s probably why we were getting the price that we were getting. Effectively, companies would take the A300 and not use their A150s anymore; that would be the idea. So, the value of the A150 that we have on hand wouldn’t be worth that much anyhow.” – Senior employee at Marvell Technology", "attrs": null, "subkind": "paragraph", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "0774783b-ed6e-4cb7-81c2-598dff5a97af", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.15, "w": 0.86, "x": 0.07, "y": 0.75 }, "kind": "paragraph", "text": "Marvell senior employee describes mis-valuing of inventory to defer an impairment as common in semiconductor industry “If they haven’t taken any reserves or impairments against their total balance sheet, then with the cost of their inventory - we’ve seen it before, where the valuation that they place is not what it actually is, and they defer out when they’re going to do that impairment because they don’t want to record a hit on their gross margin. This is a common thing, unfortunately, that I’ve seen across multiple companies in the space. That’s what I’ve seen to be done to try to manipulate earnings.” – Senior employee at Marvell Technology", "attrs": null, "subkind": "paragraph", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "662314bd-1fd3-4ba1-b157-2bb9cd0a1a25", "frameworkName": null, "frameworkSlug": null }, { "bbox": null, "kind": "quote", "text": "“So, they would take back the A150 and then they would give us an A300 at a reduced price from the retail price.” — Senior employee at Marvell Technology; “If they haven't taken any reserves or impairments against their total balance sheet, then with the cost of their inventory - we've seen it before, where the valuation that they place is not what it actually is, and they defer out when they're going to do that impairment because they don't want to record a hit on their gross margin. This is a common thing, unfortunately, that I've seen across multiple companies in the space. That's what I've actively seen to be done to try to manipulate earnings.” — Senior employee at Marvell Technology", "attrs": null, "subkind": null, "toolName": "Authority citation", "toolSlug": "authority-citation", "confidence": null, "componentId": "019dd953-78b7-702e-961a-6d01d4efab34", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.02, "w": 0.3, "x": 0.07, "y": 0.95 }, "kind": "source-note", "text": "Source: Scorpion Capital consultation calls with experts", "attrs": null, "subkind": null, "toolName": null, "toolSlug": null, "confidence": null, "componentId": "2490e648-955a-4cf6-b7dd-115acdfedb65", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.25, "w": 0.86, "x": 0.07, "y": 0.07 }, "kind": "title", "text": "Marvell indicated that Lasertec’s existing inventory has little value, given the offer Lasertec recently made to “take back the A150 and then give is an A300 at a reduced price...the value of the A150 that we have on hand wouldn’t be worth that much.” The senior employee noted that inventory mis-valuation in the semiconductor equipment industry “is a common thing, unfortunately, that I’ve seen across multiple companies in the space...to manipulate earnings: “they defer out...that impairment...because they don’t want to record a hit on their gross margin.”", "attrs": null, "subkind": "headline", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "da2607ab-6f87-46ed-adf8-7701dd67dbe3", "frameworkName": null, "frameworkSlug": null } ], "metrics": [], "tools": [], "frameworks": [ { "name": "fraud-exposure", "slug": null, "matchId": "cee47902-9ffc-4cd4-ae71-a24bec8b49ff", "evidence": "The slide explicitly discusses the manipulation of earnings through inventory mis-valuation.", "confidence": 0.9 } ], "arcBeats": [], "loops": [], "imagePathAlt": null, "thumbSrc": null, "thumbSrcAlt": null, "locked": true }