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Technology Stocks : Micron Only Forum

MU 207.36

+3.0%

Nov 21 3:59 PM EST

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To: Skeeter Bug who wrote (27197)	1/27/1998 7:38:00 AM
From: E_K_S	Read Replies (4) of 53903

Hi Skeeter - Here is a recent review from one of my Silicon Valley associates regarding his opinion of the long term prospects for Micron. Remember the market always tries to look forward. In my opinion I believe the Asia impact and delays in new facility construction by management has not been totally discounted into the stock at this time. "...How will the "Asian Crisis" effect Micron Technology?????? There are basically two factors which will severely impact MU's future earnings for the remainder of 1998 and beyond. Over the last two years, MU Die Hard investors have already painfully witnessed the huge Memory Chip margin reductions resulting in an equally huge Micron Tech stock devaluation which took us from $90+ /share down to $30. The "Asian Crisis" will severely accentuate the international decline in Memory Chip margins. This is mainly due to the fact that the Asians control approximately 80% of the world's Memory Chip production. The effect of the dramatic Asian financial crisis in the dominate Memory Chip Manufacturing producing countries of Korea, Japan, Taiwan and Singapore will require these manufacturers to dump higher Memory Chip volumes on the international market at dramatically reduce prices. THE EFFECT: As we speak, where Micron Technology's stock has already plummeted over the past three years due to LOWER MEMORY CHIP MARGINS they will have to face AN EVEN WORSE 1998 with the LOWEST PREDICTED DROP IN MEMORY MARGINS IN RECENT HISTORY. The next question is, "Can Micron Technology do something to offset the inevitable"??? This opens up the second critical factor -- The upcoming release of the 64MB SRAM/ 256MB DRAM Memory Chip products and the expensive shift from the 8 inch wafer era to the 12 inch wafer phase. The current Memory chip cash cow is the 16MB SRAM/64MB DRAM chip. The problem is that these products are nearing the end of their life cycle as the 64MB SRAM and the 256MB DRAM are coming on line in the years 1999-2000. The issue for MU is the unfortunate fact that they are currently stuck trying to compete in the low margin short life 16 MB SRAM/64MB DRAM market. It is unfortunate because to offset there currently low product margins produced on 8 inch wafers they will have to invest $3.5B + in new 12 inch wafer plant & equipment to achieve the necessary production yields required for the higher margin 64MB SRAM/ 256MB DRAM chip products. These new chips are physically larger and therefore must be produced on larger 12 inch wafers to achieve cost effective production yields. Even if Micron somehow is able to accomplish this measurable feat, if the 12 inch facility investment was made today, it will take 12-18 months before the first yielding 64MB SRAM/256MB DRAM would be produced. Taking an additional 6-8 months after that before significant high yielding production would begin. Bottom Line: MICRON ... Too little too late for 1998....." EKS P.S. Not intended as investment advise...do your own research and hope that your management can execute their business plan and make the right timely decisions.

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