Interesting Q&A with Kurlak in SBN 10/24. Don't know if anyone caught it:
techweb.com
FWIW, this confirms what I suspected - the man has a model in which lead-times are one of the most important components and seems to think that the time needed to get a chip out the door somehow invalidates the JIT/BTO trend. Great. Every end market is identical? Every product is identicial? Each company in the chip sector has exactly the same competitive strengths and weaknesses?
Sure.
Kurlak BADLY MISSED MU's last quarter. .59 v. 33, and that's a stone-cold fact he can't talk his way out of. Of all the analysts who cover this stock, had a number more wrong than Kurlak?
IMHO, Kurlak comes off looking like a bean counter.
On Kurlak's notorious August Surprise:
Question: Recently, you switched suddenly from positive to negative in your outlook. One example was your position on Micron Technology.
How does that happen?
AnswerWhen you are taking a journey -- and you go in one direction and : then another -- there is always a point in time when you have to make that turn. The point is to get to the end of the distention. We bought [Micron] at $20 with an objective of [reaching] $55 to $60. We got there and we got out. The whole idea is to buy low and sell high. It's not that complicated. The stock hit the price objective that we had set for it. Secondly, and coincidental to the stock hitting our price objective, it became apparent that Micron was not going to be able to continue expanding earnings because of price weakness in DRAMs. They had pretty much [reached the end of their] string on cost reduction -- their die size shrinks on the old 16 megs. So that story pretty much ran its course.
We took a hike, declared victory, and went home. It was not throwing in the towel. That happens when the stocks go from $50 to $20 and you get out. That's a give-up. If we are doing our jobs, we would be getting peoplein at low prices and out at high prices in this industry. If I followed a different industry there might be some other approach, but in the [semiconductor] industry, you have to do that.
Some very interesting statements in there.
Well, gee, I find it quite curious that the reality of falling DRAM prices in MU's main product over the course of several months seemed to be ignored, and yet low and behold this fact suddenly hits (totally "coincidental", mind you) just at the time the price objective was hit.
That's quite an interesting take on stock price movements - the fundamental realities of a company's business are merely "coincidental" to the stock price?
Can anyone show me written documentation that 55-60 was Tom Kurlak's price objective: A. when he made the initial call and B. in the ML 8/6/97 research bulletin.
If 55-60 was Merrill Lynch's price objective for MU, and there was a reasonable assumption that the stock would be downed once that objective was hit, wouldn't there be a basic ethical duty to a Merrill Lynch retail customer picking up Kurlak's 8/6/97 bulletin to specifiy those objectives to him or her?
Who was given the price objective and when?
And of course, we get the Master's game plan:
Kurlak:...Take profits in the stocks and wait for a better buying opportunity later -- say sometime next winter or next spring
Is Tom Kurkak saying in effect that you shouldn't buy until the Winter of 1998 or the Spring of 1999? Is that "next"?
Good trading,
Tom |
