Rambus (RMBS) - Eagle or Penguin Message Board

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Technology Stocks : Rambus (RMBS) - Eagle or Penguin

RMBS 94.69

-0.8%

3:59 PM EST

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To: Bilow who wrote (77002)	8/8/2001 6:52:13 PM
From: Skeeter Bug	Read Replies (2) of 93625

>>So of course Micron is going to pump out as much chips as possible. Here's a prediction: Micron won't ever reduce production, no matter how much money they lose per chip.<< bilow, i'd like to add a little resolution here. micron may reduce production if the marginal cost to produce a chip outweighs the marginal revenue it brings. that is until the marginal cost and marginal revenue equate then they start again. the key word is marginal. micron will report billions in sunk cost losses when marginal cost = marginal revenues. however, the sunk costs are already spent, the canon has already been shot. micron won't stop producing chips (mcost <= mrevs) until the equity markets stop subsidizing their grossly negative cash flow. in fact, micron hopes the asian players cut back so they can sell more. the reality is that the only REAL way to reduce per unit cost is to drastically increase unit output. it is really a marvelous thing to watch - a dram death match, if you will, that requires billions in annual antes.

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