>>>"Why are they able to shrink their dies better than the competition? Could it be the application of some advanced alien technology discovered in the wreckage of an extraterrestrial spacecraft 50 years ago in the New Mexico desert?"
What a coincidence -- saw a great live TV show on that very subject last night.
I'm baffled by MU "profitability" as well. I'm still short MU and have lost a ton of money during the last year on expired puts. Now, I'm just trying to learn as much as possible from the experience by learning more how to "value" a company properly so I don't make the same mistake next time.
I was going to look at MUEI's financial statements to see if their cost of good's sold has gone up in relation to sales. Could be related to MU having more contract sales (to MUEI??) than normal, which could push some of the burden of higher dram prices to MUEI. I'm not saying that's what's happening but seems like a lot of coincidences there.
1. MU reduces holdings in sub.
2. MU has more contract than spot sales (than normal).
3. Sub has losing quarter.
It's certainly a giant puzzle. For example, I posted a note earlier saying how MU was getting much of it's yearly taxes paid to Lehi city back in the form of a grant. I wonder how much that is adding to the bottom line? (Start's I believe with this quarter).
Good trading to you too.
Kathleen
PS. Here's the MU/Lehi info (23 May 97):
Micron, Lehi make $30 million deal By Associated Press
LEHI, Utah _ Micron Technology Inc. finally signed an agreement with the city's Redevelopment Agency that will allow the computer chip manufacturer to begin recovering approximately $30 million.
The economic development agreement had been on hold for a year while
officials from Micron explored options for the company's partially constructed Lehi plant, where work has been virtually halted since early 1996.
''When Micron went into the slowdown, we explored with Micron several
options,'' said Reed Sunderland, a Lehi City Council member and chairman of the RDA. ''They finally came back and agreed that the original contract with the 12 years (for repayment) is what they wanted.''
Neither officials from Lehi nor Micron mentioned specific options that were explored. Micron spokesperson Julie Nash said the company always intended to sign the agreement, but the timing was changed when construction slowed last year.
Nash said the signing last week was not an indication Micron plans to resume construction, although the company plans to do so when the market is favorable.
Under the economic development agreement, the RDA will receive taxes levied on Micron's Lehi property. The RDA will then redistribute revenues among Micron, the city, Alpine School District and a special improvement district.
In order to install infrastructure at its Lehi facility, Micron put up approximately $30 million. The money has been used for sewer systems, culinary water projects, electricity, natural gas and roads.
With the economic development agreement now in effect, the RDA can begin to pay back Micron's loan for infrastructure, using the company's own taxes. The agreement says the RDA annually must pay 3 percent interest on the loan. Remaining tax revenues for the next 12 years are to be divided up, with 70 percent going to Micron and 30 percent to be divided between the city and Alpine School District.
The agreement was reached just in time to allow the RDA to function for the 1997 taxing year.
It appears Micron's taxes on its unfinished plant will not be enough to meet budget projections for the RDA. Unless Micron resumes construction and starts production at the plant, all the parties on the receiving end of the RDA _ including Micron itself _may receive less money than projected.
However, the 70-30 formula remains in effect regardless of the amount of taxes Micron pays. Despite the possibility revenues might not meet projections, neither Lehi nor its taxpayers are at risk, Sunderland said.
''We've felt Micron's been more than fair with us, and in the long run, we feel like the city will come out very well,'' he said. ''We figure the taxpayers in the community can't have any gripes.''
The only debt incurred by the RDA is approximately $400,000 for operating costs, and that should be repaid to Lehi within two years, Sunderland said.
If Micron were to sell the plant or fail to ever start production, it could stand to lose part of the approximately $30 million it fronted for infrastructure. But if Micron decides to resume construction, it could provide even more money for infrastructure. The RDA budget could expand to as much as $70.8 million. |
