carl--
kind of like mind the pennies and the pounds take care of themselves, right.
from a sales perspective, i would agree that 16Mb is still the volume generation. however, i do not think the asians are losing money on them. samsung is in their 2nd generation product and their cost cutting prowess was better with 16Mb than with 4Mb, and i think the same curve will be in place here. so, MUs first VOLUME (i know they are making samples, but volume production is a differnet story. yes they have some of the equipment they need, but you make it sound like they have the ability to shift production to 64 overnight. they dont.)
64Mb products may cost 18, while samsung will be maing theirs for 15 or less. of course, the curve does shift to MUs favor, but by that time samsung and the others have made their billions and are moving to the next generation.
this isnt new information. it has happened EVERY generation. and the facts dont lie...until the 4Mb generation MU was a nobody. 4Mb hung on longer than anyone expected, allowing MU to make some good money. but 16Mb is now at or below their costs. remember, we figured their costs to be around 4.50 during the summer and they SAID in the last cc that further cost reductions would not be significant because the product is mature. i think that MU is driving down 16Mb pricing to delay the inevitable and is in effect propping up pricing on 64Mb parts, allowing their competition to enjoy profitablity for a longer time.
let me put it to you this way...if MUs strategy has been so brilliant, why are they so small compared to samsung's semi group? it would seem to me that samsungs strategy is a little better.
i hope MUs transition to 64Mb is smooth. i want to be long. but the company has been very dissapointing. i used to think their strategy was good, but in the long run it is not effective for a long term investor. i want to own MU for years, not for a few months, then go short. the thing is their in ability to move from a highly cyclical business to a smoother one is frustrating. it bounces up high, then falls back low, then repeats. I HAVE NO DOUBT THIS WILL HAPPEN AGAIN, AND I WILL CONTINUE TO PLAY IT. however, i would just once like to see the company puts its engineers to good use, come up with an effective diversification strategy and cut the rug out from under the asians on the next generation.
good luck to all,
trey |
