David,
If MU misses the street by .10 or more, it's going to be a quick ride down to $30 support. We're bouncing off of the first test of the 200 DMA in a strong market today, but the trend is down. When the fund selling accelerates, look out.
The first big drop in MU was followed by a trading buy as everyone looked at the $40 support level. I have a friend in institutional sales who purchased 40,000 shares for a client the day of the drop. They made a couple of points and were outta' there. Guess what support level was subsequently broken? And that in the face of TXN running to new highs. The virtue of DSP's vs. a mishmash of unproven technologies.
I don't doubt that MU will be a competitive force going forwards. They have done a terrific job with die shrinks, etc., but that debt load will be a drag on earnings, bit growth has slowed, and ASP's are way down. M-stamp, FPD's, and other new products won't be a factor until mid 1998. I looked at the most optimistic earnings estimates for 1998 (who can possibly look that far ahead?), and concluded that valuations based on those numbers were ridiculous.
That's forward looking, and didn't account for the weakness in the underlying assumptions which evry bear was so correct in pointing out!
Good luck...this one is a great trending stock.
Cheers,
Peter Shaw |
