Earlie,
MU made $.04 this quarter, and the analysts think minus $.13 or
so for Q2., the current quarter. With current ASP's around $3.00,
and using an estimated $4.50 (a bit generous, and David might
disagree, but lets be nice) as an average net cost, if the company
ships even the same number of units as last quarter (100 million),
they will drop $150.0 million on memory.
I am reluctant to respond to the same issue again, but your comments are so far from accurate and I believe without ANY basis that I thought I would try from a different perspective.
The average selling price of one of MUs hottest selling chips of 1997, 16mb DRAM, has been under pressure because of the Korean debacle with the spot dropping possibly below $2.00. This does not mean that the contract prices by DELL and others ON AVERAGE went this low. Now these prices have also recovered and hovering around the $3.50 range.
But oddly enough in 1998 Dram is not MUs highest running product but rather 16mb SDRAM and the spot has not significantly dropped... but on average is in the $4 to $4.50 price range. MU started the quarter at 70% SDRAM so if one would want to guestimate the ASP for MU 16mb chips you would find it at or somewhat above $4.00 per chip. It is not the $3.00 per chip you have contended all along. If you can show analysis to arrive at $3.00 it would be greatly appreciated by all on this thread.
As far as the production costs for these chips it is well known to be around $3.00 per chip. As in the past I have asked if you can disprove this then please let us see it.
Now as far as this Net cost of 16mb chips that you allude to as $4.50,
I do not know how anyone outside MU or another semi company can derive this type of number. You must know the SGA, R&D, and other cost specific to only the 16mb chip to calculate this so called "NET COST".
Their is so much R&D going on for PC100,displays, maybe microstamp, 64mb 256mb chips, new test facilities etc that these expenses cannot be readily broken out as you might suggest, but what I believe you are doing is taking all this expense and associating it to 16mb chips.
I believe you are just being unduly over pessimisstic of MU. I do agree that MU will have difficulty making any money fy98 but how that relates to market price is very different. The fundamentals for MU are improving and if they continue MU might be in an uptrend inspite of its lack of '98 earnings.
Good Luck Trading
DavidG |
