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Technology Stocks : Micron Only Forum

MU 257.74

-2.3%

1:14 PM EST

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To: TREND1 who wrote (6143)	12/15/1996 1:51:00 AM
From: Jefferson Prescott Dewhurst	of 53903

Hello Larry et Al: I've been following this thread for awile now and I find it informative,entertaining and quite fascinating.The bulls appear to be more technical analysis oriented and on that basis have been correct and vindicated by the market over the short term(last couple of months). The bears basing their position on fundamental analysis have (correctly I think) pointed out that the stock is grossly overvalued. Unfortunately for the bears the "Market" is driven by Perception & psychology not fundamental analysis and the "Street"(IMHO) has been feeding(manipulating) the perception that "Chips" are "HOT" again, the bottom is in and it's all up up & away from here. My opinion is that the decline in DRAM prices,increased supply,lack of earnings by Micron and probable continued decline in DRAM prices & Micron earnings for 1997 & 1998 will eventually result in the "MARKET" valuing Micron as the commodity chip cyclical that it is and always has been. This means a P/E of 8-12 on expected 1997 earnings of $1. I think that Micron will produce better than expected earnings on Monday as a result of excellent cost controls,last quarter's DRAM ASP and greater than expected volume.However,this will only be the opportunity for the pros to sell under cover of a "good"earnings report.I think the price will jump Monday & possibly Tuesday morning but close down for the day on Tuesday.The decline which begins on Tuesday will take the price to $8-12/share by January 18. The big money are not fools. They will not pay 30-40x 1997 earnings for a commodity cyclical low margin chip vendor with declining market share & earnings when they can buy INTEL for 24xearnings and own THE monopoly chip vendor in premium priced microprocessors. This will not happen. Therefore, my position is long Dec 35 calls & long Jan. 30 puts. I expect to close 1/2 the calls on Monday & 1/2 on Tuesday morning at 100% min. profit and ride the puts all the way to $12 & below. I have no criticism's of anyone's position,postings or theories or motivations and I think all of you are correct in your analyses and wish you well as you playout this fascinating scenario. Special thanks to you Larry for the information you've provided on DRAM pricing trends. Regards, DEWY.

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