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Technology Stocks : Micron Only Forum

MU 263.78

+4.5%

3:59 PM EST

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To: patrick tang who wrote (37520)	8/16/1998 5:14:00 PM
From: Dave Gahm	of 53903

Patrick, Good question... I do know it's a sure thing that the variable costs are going to be higher than the current market price of 16mb chips, so yes they will lose money, but no it won't be directly comparable to TXN's last DRAM quarterly loss. Again the important point, IMHO, is cash burn, and it's clear that they will have negative operating cash flow and will be spending over $200 million each quarter to upgrade the TXN fabs. They will also have the added interest payments on the TXN debt. Management stated during the conference call that annual depreciation on the TXN fabs would be about $200 million. I am not enough of a whiz on corporate accounting to take a stab at what the actual incremental loss per share will be from the TXN deal, but would appreciate anyone's comments on the subject. It was interesting that MU declined to give any pro forma earnings numbers when asked, but just said that the deal would be dilutive for a year. Regards, Dave

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