Ed, that's a reasonable assumption and a good point to raise.
But here's what he said about contract pricing:
Contract pricing remains firm in the $5.50-6.50 range, with an upward bias in the last couple of weeks [8/17/99]
Contract pricing has also been moving up. Two weeks ago, Micron boosted its contract price to $5.00 and is now seeking to push contract prices to the $5.50-6.00 range. [8/6/99]
In the past week, prices for 64Mb DRAM have increased by about 30% in overseas markets and by about 15% in the U.S. to about $4.90-$5.00, which is still below contract prices, which is currently about $5.50. [7/13/99]
Fine. Apparently MU's contracts were below spot and/or overall contract pricing.
But if you assume they'll sell 25-30% spot and spot has moved dramatically from the point when his Q499 estimate was set at -.20 (6/24), then you also read his own statements regarding MU increasing their contract prices ("two weeks ago" from 8/6/99 would be around 7/23), you assume their Q ends 9-2-99 (?)...
Where does that put you on the John Joseph timeline?
His estimate of -.20 made on 6/24 would have occurred with 10 weeks to go in the quarter. At that point, the past is sunk. The issue is what this person sees going forward w/ 10 weeks to go left in the quarter. What he sees on 6/24 is an ASP of 4.50 for Q499 based on his assumption that the downward trend will continue.
However, if they raised contract prices "two weeks" ago from 8/6/99, that would mean that they raised prices with 60% of the remainder of the Q from 6/24 on.
He comes out later (8/17/99) saying that contract pricing remains firm in the 5.50-6.50 range. He writes that with 30% of the Q from 6/24 on remaining.
He is obviously well aware of the spot.
He is obviously well aware of the contract.
He presumably knows when their Q ends (more than I do; for all I know it's not 9/1-9/2, but a week earlier).
And yet, despite all that, we have the Jupiter Effect.
Whatever increase in the spot from 6/24 onwards and increase in their contracts from 6/24 onwards was miraculously off-set by some unspecified downside.
We'll see.
I know I'm busting his stones here on this issue, but I think it's justified.
I guess I'm also in the strange position of finding fault with the analyst fringe yacking about the spot prices when they know fully well that contracts play such a key role AND criticizing a guy who's Q499 estimate is .02 below the consensus of -.18 for not raising it if through brute reason you can make a case that it is somewhat strange for his Q499 numbers to fail to match his stated observations.
I still think I can the two-front war.
As long as it doesn't involve an extended march into the Russian heartland with winter approaching <g>
Good trading,
Tom |
