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Technology Stocks : Micron Only Forum

MU 244.90

+1.6%

3:59 PM EST

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To: Earlie who wrote (26352)	1/12/1998 9:21:00 PM
From: DavidG	Read Replies (2) of 53903

Earlie, >> It would be appreciated if you could provide some commentary on your assertions that: - MU is making money on 16 Mbit........the current selling prices are well below those posted by the company as valid last quarter.In that quarter, they made $.04 and added dramatically to both inventories and payables. << I think you are mixing MU with MUEI problems. If you were to break out Semiconductors from PCs the numbers would not look so bad. The SGA was much higher(about $28million) this past quarter because of MUEI taking away .13 eps for the 1Q98. MU would have earned $.17 otherwise. In 1Q98 MU had an asp of about $4.90 with a 16mb cost of approximately $3.50(with some analysts claiming approx $3.00). I would expect 2Q98 to be close to $3.00. Also don't get yourself confused with so called memory prices being sold in SEA, it does not necessarily mean that MU contract prices are that low. For the last month MU's asp for 16mb is certainly above $3.50 and probably closer to $4.00. >> I was not able to follow the logic of why spot prices will rise. The demand side of the equation is weakening (PC sales growth declining and most inexpensive computers are sold with less memory than their more expensive brethren.). << I think you missed the big picture. Korea is in a cash crunch and desparately needed to raise $US so they dumped their products at firesale prices. Now it has subsided and production is being cut back resulting in a rise in spot prices. Also memory for inexpensive computers is 16mb at very minimum and most under $1000 PCS are equipped with 24 to 32mb memory. Remember.. cheap PCs will use EDO not SDRAM that is the difference in cost not necessarily the memory size. Everyone now demands larger memory! >> If ever this company provided proper accounting, including normal amortization, inventory control, depreciation and writedowns of white elephants, their cost of production would not compare well with many of their competitors, and $4.50 would not provide consequential profitability. << Earlie, you must be a "forever Bear" b/c you are spieling the same nonsense as the rest of the bears. MU is a low cost producer of memory...they made money last quarter when others all lost money and in spite of MUEI. Remember that the biggest disparity between the Koreans and MU is that MU is using .25 micron fabs and give them the credit of working smarter. The Forever Bears on this thread are all losing money on MU and therefore they just let their emotions get in the way of making sensible judgements about this company. Don't fall into the same trap and then maybe you will start making money on MU too. There is enough profits to go around. Good Luck Trading DavidG

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