I don't get it.
With MU's share price bounding higher and approaching all-time highs, it's time to look at the mighty engine driving this powerful move, DRAM pricing.
Last quarter, when 62% of MU's sales came from 64 meg (8x8) pc100 SDRAM, the average selling price of that benchmark dram slide from a high of $9.59 at the beginning of the period to a low of $4.70 at the end of the period and overall for the quarter had an average selling price of $7.85. MU earned $.58 for the quarter.
So far, so good.
At just over halfway through this, the average selling price of 64Med SDRAM is $5.98, about $1.87 below last quarter's $7.85 and suggesting that dram price will have to rise quickly to $9.72 just to equal last quarter's performance, even allowing for cost reductions. Since SDRAM during the next month and a half probably won't rise sufficiently to reach the $9+ quarterly average selling price, this suggests earning below last quarter's $.58, perhaps--I'll be generous--something like $.45 a share.
Carrying this speculation a few steps further, Yahoo shows the current Consensus EPS estimates for the year at $3.54, down a little over 18%from $4.35 90 days ago. With current year-to-date earnings of $1.77 and a generous $.45 for this quarter--total $2.22--that requires MU to earn $1.32 in the June-August quarter, which in turn will require DRAM average selling price of from $9 to $10 for the entire last quarter.
Finally, that $3.54, assuming it is actually realized, makes MU worth perhaps $60 per share, not the $130 to $150 touted by analysts.
Or maybe I'm missing something.
Best
--Steve |
