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Increased capacity combined with a slowdown in industry demand led to lower factory utilization and declining profit margins.
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However, we expect that as the industry revives and demand picks up, TI could leverage this additional capacity and consequently increase its factory utilization rates which, in turn, will improve the gross margins.
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Sapphire pricing is suffering from low industry utilization due to a lack of demand for LED backlighting for TV currently, and is unlikely to recover anytime soon as significant capacity is added in 2012 and beyond with the help of merchant suppliers of equipment.
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The company said margins also were hurt by weaker than expected demand, which contributed to lower-than-anticipated ASPs and lower-than-expected manufacturing utilization rates.
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If the government wanted to regulate, they could demand an annual report on each patient they support, giving the actual utilization, health care outcomes and proof of appropriate management of common illnesses, immunizations and cancer screening.
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Capacity utilization is already below its average level and many other indicators of economic slack reflect more supply than demand.
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Navistar, which makes commercial trucks, diesel engines, and buses, is benefitting from a rise in demand for freight trucks, as well as a jump in fleet utilization.
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