Earlie: compliments on cogent posts. However, I do hold a significantly altered view point visavis mu. May be you can clarify somethings for me from your earlier post:
With respect to MU's future:
- Forget 64Mbit (or 256 Mbit, etc.), the company doesn't have the dough to
build required plant, and is well behind the competition in any event;
Do you have any data to support this conjecture? Clearly, there is no publicly available information that supports your position. On the contrary, MU's performance hitherto seems to indicate that they are ahead of the competition in terms of execution.
- May well prove to be a blessing in disguise, as the demand for larger memory
chips is simply not large (while supply already is), nor can one construct a
heavy demand scenario from present reality;
More subjective view points. SIA estimates 30 - 50 percent memory bit growth over the next three years and I think they are conservative. If you look at historic growth of chips over the last ten years, your statement does not hold water.
- Company faces a deteriorating pricing environment. Supply side is endless as
new fabs come on stream
Chip prices fall at least at a 30 percent annual clip; Micron has a history of squeezing more out of their processing and consistently end up in the black: They have managed to stay ahead of price erosion, which is a given in every technology. Look at Dell, they have made oodles of money in the much maligned PC business (and folks, including your good self and Mike - I am not wrong even if I am - Burke) and people have been saying there are no margins left anywhere.
- Moving from 4 to 16 Mbit manufacture cannot be compared with moving from
16 to 64 (or higher). this applies to money, expertise, and time. MU must
successfully climb a cliff as its competitors sling arrows at them from above.
More platitude. There is hardly anything substantive or factual in what you say here. Statements without the support of hard data simply ends up being bias. If anything, MU has the expertise, technology and the management (now the money also) to run (and often lead) with the pack.
- Balance sheet is weak, and this is a "deep pockets" game. Best to view recent
junk bond as a form of philanthropy.
You might have a point here, but that is the nature of the chip business. If they execute with their wonted efficiency, they are going to end up with lots of money. Memory, for all practical purposes, is a perpetual demand game. The next boom cycle should begin in early 1998 (SIA's projection, not mine). MU has been adroit at utilizing their resources to get where they need to. Till the bears here can produce some facts (and not repeated cliches to assuage stress from investment positions at the wrong end of the stick), there is no need for bulls to counter all the inanities that abound.
Sridhar |
