Curlton, the most interesting thing about Joseph's report is
his estimate for Q499.
His estimate is -.20 in today's 8/24 report entitled "MU: DRAM Pricing Rising; Raising Estimates and Price Target"
And yet, isn't it true that in his 8/17 report, entitled "MU: DRAM Pricing Update", Mr. Joseph's Q499 estimate , was also -.20?
In his 8/12 report, entitled "MU: DRAM Prices Flat", the estimate for Q499 was also -.20.
In his 8/6 report, entitled "MU: DRAM prices continue to rise; raising estimates and price target", the estimate for Q499 was also -.20.
In his 7/27 report, entitled "MU: DRAM Prices Firming", the estimate for Q499 was also -.20.
In his 7/14 report, entitled "MU: It's More Than Micron; Raise Rating(To Buy) Price Target", the estimate for Q499 was also -.20.[FY00E .60; FY01E 1.39]
In his 7/13 report, entitled "MU: DRAM price rise may be short lived", the estimate for Q499 was also -.20. [FY00E -.25]
In his 7/9 report, entitled "MU: Slight uptick in DRAM spot", the estimate for Q499 was also -.20.
In his 6-24 report entitled "MU: Micron Reports In-Line, Trimming Estimates" the estimate for Q499 was also -.20.
Once again, playing the naive fool, I ask the following:
How is it that this analyst can...
....spend so much time watching DRAM pricing, the industry and MU...
...spend so much time time modeling the MU...
...spend so much time writing research reports about MU...
...spend so much time writing research reports commenting on "firming DRAM prices"...
...can increase his FY00 estimate from -.25 (7/13) to _____
...can increase his FY01 estimate from 1.39 (7/14) to _____
...can increase his price targets from 60 to 75 to 90 to 100...
...and yet never in the course of any of the above...
...and in spite of all the work that went into the above...
...this man's estimate for Q499 has not budged a single penny?
Why?
How is that even possible?
How many reports did I just look at?
Let's see, 6/24, 7/9, 7/13, 7/14, 7/27, 8/6, 8/12, 8/17, 8/24 - 9 Micron specific reports. So in the preparation of the 8 reports subsequent to 6/24, never once did this man think "gee, I wonder if all those DRAM price changes I'm writing about could possible have any bearing on the estimate I'm publishing for the upcoming quarter?"
So basically, this analyst can change estimates on the fly about FY01, the beginning of which is over a year and not even in this century...
...and yet when it comes to perhaps the most knowable estimate of all - it remains -.20.
Why?
How is that possible?
Where were prices in the 6/24 report?
"We believe prices will continue trending downward this quarter and have trimmed our Q4 ASP estimate for 64Mb DRAM from $5.25 to $4.50. We are also trimming our fiscal 2000 average price from $5.00 to $4.50."
So based on the expectation that prices "will continue downward thi quarter" and a Q4 ASP estimate of "4.50", what is the Q499 esimate presented by Mr. Jon Joseph and Salomon on 6/24?
-.20
And what did today's report have to say about prices?
DRAM prices continued to move up sharply on Monday. Prices finished trading at $7.40 on Friday, and finished trading at around $8.00 on Monday. *We are raising our average price assumptions for MU from $6.50 to $7.00.
And what is the Q499 estimate?
-.20
To be fair to him, I don't think the "7.00" is for 4Q99. But since the wording is so vague, perhaps it could be.
In either case, we have an analyst who has copiuosly documented the changes in DRAM pricing from 6-24 to 8-24 and has produced a body of work illustrating rising DRAM pricews which can only leave one to reasonabley surmise the previously stated ASP assumption of 4.50 for Q499 is know longer the current assumption...
...and yet the q499 estimate remains where it was when the assumption was 4.50...
-.20.
Why?
How is this even possible?
Can anyone explain this apparent discongruity?
Good trading,
Tom |
