Sandisk cost accounting seems good... for them

I thought this was worth reprinting:

The resulting price falls halved Toshiba's operating margin in its chip business to 4.8 percent in October-December from 10 percent in the previous quarter, and cut the unit's profit by 60 percent.

Toshiba has a lot more moving parts but they're saying the margin degradation came primarily from NAND flash.

So Sandisk is injecting vast amounts of working capital into an off balance sheet JV (Flashvision, which they co-own with Toshiba) that's hurting Toshiba's results substantially and yet Sandisk reports pretty healthy product gross margins and profits.

I just don't think Sandisk's financial statements give a clear picture of the health of the company. They don't tell you what their real manufacturing costs are. I think it's a deceptive structure.