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Technology Stocks : Micron Only Forum

MU 354.63

+5.4%

1:50 PM EST

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To: Carl R. who wrote (22981)	10/26/1997 1:41:00 AM
From: Skeeter Bug	Read Replies (2) of 53903

carl, a couple comments. 1. i've seen no data that says mu is the low cost producer. they are very good and right in there with the best, but i don't believe the they are the best just b/c they say they are. in the 10q, they said they didn't know what the inventory levels of their competitors were. thery don't know inventory but they know their cost? come on. remember, :demand continues to remain strong for dram..." ;-) 2. the low cost producer wins sometimes - not all the time. the deep pockets win an awful lot, too. mu spent $500 mil on equipment last year. they earned $200 mil from operations. they were -$300 mil during the peak production of 16 mb dram. i won't even comment on their aggressive accounting techniques used to boost eps. 3. mu had to sell over $100 mil muei and offer $500 mil just to stay afloat - DURING THE GOOD TIMES. this didn't happen on the transition to 16 mb. 4. mu made a boatload of money on 4 mb before switching to 16 mb. this is different now. 16 mb was a net loser for mu. they spent more than they made. 64 mb is already in a glut before mu gets a decent crack at reducing costs. 5. mu expects to spend $1 bil to just get in the sram and 64 mb game. they have to do this before their process expertise can even kick in. everyone else will be way ahead of the process curve to begin with so mu will have to catch up and pass them in a terrible pricing environment. let's summarize. mu earned a few pennies over a dollar per share last year. they hawked some muei for another $0.60 or so. they pulled in about $1.60 and change for the year. they spent $2.50 a share for equipment, etc. a net loss. they expect to spend another $5 per share this year. with dram hovering around $4-$5 (really closer to $4), mu is making less than when they made $0.33 with an asp of $6.50. so it looks like another year of profits around $1. it could be much worse. so, mu has spent or plans to spend $7.50 per share in order to make $2.00 and change, if things go well. please tell me what part of that business plan gets you excited? tia...

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