Paul,
Nice analysis. However, it may be appropriate to look also on margins
from various operations (from the same 10K for 1997)
Gross Margins 1997 $ %
PC systems 259,473 17.0%
Contract manufacturing 33,397 11.5%
SpecTek memory products 44,876 32.6%
Total gross margin 337,746 17.3%
While only 7% of revenue stream, non-PC operations accounted for 20%
percent of the gross margin. These may be affected by the DRAM pricing as indicated in the same 10-K
Contract Manufacturing: Revenues from the Company's contract manufacturing operation were 22% lower in 1997 than in 1996, primarily due to the effects of a sharp industry-wide decline in pricing for semiconductor memory products and, to a lesser extent, a shift in product mix, which were partially offset by a higher level of demand for more complex products.
SpecTek (the most profitable line in 1997): In the event that average selling prices for SpecTek's semiconductor memory products continue to decline, the gross margin for the Company's SpecTek semiconductor memory products operation would decline and overall results of operations could be adversely affected.
I guess, this explains why falling DRAM prices affect MUEI profitability.
Still long MUEI and willing to wait
Yakov |
