DavidG,
Thanks for the insight on Smith prices. It's hard to compare Achilles and Smith closely ... Achilles updates roughly once a week but we don't know if this is a new spot price or an average for the week, although it looks like a spot, and Smith's price is for the week ended ... an average for the week? And the two aren't on the same day-end. But they look to track pretty closely, although from my calculations (and the pyramidic scrolls ... Beyond the Fringe anyone?) it looks like Smith is about 38 cents higher on average (this is from late Aug. thru to present). Don't know how you got Smith lower than MU's $6.50 ASP for the Aug. Q, because using Achilles I got $6.25... but it's obviously an inexact science.
In your earlier comments, you talked about 20% of MU's sales being specialty products. Not sure what you mean ... I'm excluding MUEI's boxes altogether. In the 10K they said flash was <1% of memory sales in fiscal '97 and static RAM (SRAM) was 1%, down from 6% two years ago. Also, doubt very much if they get a 10% premium for their memory chips. This is a huge volume commodity market. The $6.50 ASP last quarter is likely due to their timing of sales as Skeeter said.
Finally, MU management has put out this idea that there's some sort of a difference between spot and contract markets. This sure smells like a red herring. What I mean is if a contract lasts 1 week and you have a glut of product it gets repriced at spot once a week. So in reality how does this differ from spot? ... smoke screen from Boise ... and analysts like Niles regurgitate it. I could argue the opposite. E.g. say I'm CPQ and MU trys to sell me memory. I tell them boy there sure is a lot of this stuff around, maybe you should shut the fab down for a couple of weeks (heh,heh). Tell you what. I'll allocate you 20% of my requirements for the next 3 months but it's gotta be at a 5% discount to spot. If supply overwhelms demand, you would expect this to happen, i.e. contract to be at a discount to spot (Jerry D. probably thinks I'm nuts).
regards, Mike |
