When it rains it pours

When you look carefully beneath the ARM debt gloom, you will see the opportunity to board. The huge loss was a result of the huge (foreign-currency denominated) debt that was made worse by our weak shilling during the financial period. The company is fundamentally solid. So while the bad news is being peddled around by mainstream media regarding the huge loss, most investors are being blinded and end up ignoring the revenue that was registered from their operational activities.

I see no contradiction.

A weak shilling is a macro-economic factor, not a fundamental factor. A debt can be cleared and for ARM's case that issue is already being addressed. I would only be worried as an investor if there is a worrying change in the company's strategic operations. As it is, the company is fundamentally solid.

What are fundamentals?? Let's start with that definition. To me, a highly indebted company at the mercy of macro factors is not fundamentally sound.

@VVS, waiting for you to weigh in on this debate.

All firms are somewhat affected by macro-economic factors. High levels of debt help supercharge profits when the econ (sales) is 'good' and the interest rates low. The problems always show up when the tide goes out. I am trying to paraphrase Warren Buffett.

Debt isn't bad but it is risky. On the other hand, how does a manufacturing firm grow without debt? [Assume there's limited equity available]

All firms are somewhat affected by macro-economic factors. High levels of debt help supercharge profits when the econ (sales) is 'good' and the interest rates low. The problems always show up when the tide goes out. I am trying to paraphrase Warren Buffett.

Debt isn't bad but it is risky. On the other hand, how does a manufacturing firm grow without debt? [Assume there's limited equity available]

“You can’t get anywhere by paying 18% or 20% on what you owe, but you can make a lot of money charging that to someone else. You don’t want to be on the bad side of that equation.”

"When leverage works, it magnifies your gains. Your spouse thinks you're clever, and your neighbors get envious," explained Buffett in his 2010 shareholder letter. "But leverage is addictive. Once having profited from its wonders, very few people retreat to more conservative practices. And as we all learned in third grade — and some relearned in 2008 — any series of positive numbers, however impressive the numbers may be, evaporates when multiplied by a single zero. History tells us that leverage all too often produces zeroes, even when it is employed by very smart people."