Robert, exactly. If DRAM pricing continues to rise, MU should follow.
I guess they'd get in trouble writing something like:
"Ceretis paribus, when DRAM prices rise, MU rises. When DRAM prices falls, MU falls. Right now, it's rising. We could spend a lot of time attempting to predict when then rise will stop. In the past we have and we have consistently looked very foolish doing so. Frankly we're just no better at that now than we were 6-months ago or a year ago. We're confident the upside of the industry shakeout will occur within the next year and a half. We believe that the magnitude of this seasonal leg is evidence of the early effects of shake-out, but we do not remain as sanguine once seasonal demand ends. From a DCF standpoint, the stock is well above what we estimate fair value to be, but since the mantra is "When DRAM pricing rises, MU rises" hold your noses and watch pricing, although we question the risk/reward trade-off at present prices. Also watch for a sudden sell-off following earnings, since it seems the market does a better job than we do of forecasting earnings, which makes sense, when you consider A) how loathe some of us are to change our estimates and B) how shakey our modeling is AND that the stock has had a tendency in recent quarters to react in opposite direction of the "surprise" (winky, winky).
But since we have to continuosly confirm our own importance as guides to the market we're going to write the same b.s. we've been writing all along in which we drag in all sorts of ancedotal evidence to convince you we have a real handle of what's happening, but please bear in mind it's only because our research director is pointing a bonus to our heads...and truth be told, if we really had our way, we'd all be Mick Jagger..."
Stuff like that I'd respect. At least it's honest.
I don't think there's a conspiracy although I believe "the scenario" will occur. IMHO, it's more likely to occur in 2001 than by the end of this year.
And I think "the scenario" has more to do with the level of excellence present on the i-banking side of these firms. It was a great deal and they'd be crazy to change underwriters.
Good trading,
Tom |
