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Technology Stocks : Micron Only Forum
MU 207.36+3.0%Nov 21 9:30 AM EST
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To: Earlie who wrote (25502)12/16/1997 9:08:00 AM
From: Sid Turtlman  Read Replies (1) of 53903
 
Earlie: Another thing to keep in mind: When a conglomerate owner of a Korean DRAM plant goes belly up, that doesn't mean that the plant gets closed down and dismantled. It gets sold to someone at a knockdown price, who then has a lower cost basis from which to continue to produce the product.

These plants all are profitable on a marginal cost basis, even increasingly so as the workers are paid in a depreciating currency but the output is sold in ever more valuable dollars. So it makes sense to keep producing, no matter how broke the parent company (or ex parent company, if sold to someone else) may be.

This will cut back investment in future plants, but MU's problem is that there are too many producing plants in the world now, and they are not going to be closed down. At some point demand will catch up to supply and the situation will be more positive, but that will only do MU some good if it still exists.
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