Here Comes The Calvary!! From today's WSJ:
"Seeking to bolster market confidence in South Korea, the U.S. is
considering a move to lend some of the $5 billion it promised to make
available as part of a "second line of defense" in the international bailout of
the dollar-starved nation. Meanwhile, several major U.S. banks said they
are considering rolling over their loans to Korean customers."
See my earlier post #1582....Moral of the story: Borrow a little bit of money, and you have a debtor-creditor relationship...Borrow a lot, and you have a partner.
While the overall good may well be served by rescuing South Korea, the interests of CY may not be so well served because of further downward pressure on SRAM pricing. This may be a short term event, however, if CY can quickly move towards .25 and .18 micron linewidths, which Asian competitors may not be able to supply due to falling behind because of lack of credit to ramp up new facilities and technologies. Thus, CY should gain the advantage in the market for smaller linewidth products, not to mention the 6 transitor product discussed in the recent press release.
But can TJ and the troops get cracking and seize the opportunity? Who knows. As profitability suffers by reason of SRAM pricing plus transition downtime, I think we will re-visit share prices in the $7's again. This will be the time to buy. If the market is willing to overlook that CY will probably not make its numbers in 1998, and is willing to bet that 1999 will be the year because of market advantage in smaller linewidth products, then a stategy of accumulating now may prove worthwhile. While the stock could be bought and held for a gain over a 2 year period, short term in and out trades should also be rewarding, because the water will be choppy. All of this, of course, IMHO ....
Signed, Still a Glutton (Who Will Never Learn, But Who Is Pursuing An Instrument Rating In Broom Flying)
Happy Holidays To All On the CY Thread!!
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