>>Still playing the puts, Michael? From where I sit it looks like this stock has made about
the same number of up moves and down moves over the last year or so. I'd have to
guess that the sellers of options have been the big winners so far, and the buyers of
both puts and calls the big losers. I have made only occasional bets on this company,
mostly on the long side, mostly successful.<<
carl, untrue. that fall from $60 to $22 was so fast and so furious that some put players were making big bucks. kerry, i believe, had a net 200-300% on his entire put portfolio even after losing from $30 to $60.
i did the same but ran out of risk capital for personal reasons near the apex. i lost all the downside from $60 to $38, but made a ton from $38 to $25 by betting more than my normal amount. i'm a put player that is net down 10% or so AND I PLAYED THE GAME REALLY, REALLY WRONG.
So, some put players did EXTREMELY WELL and those that played it poorly are still alive and kicking. and much more wise ;-)
>>My take on some questions regarding MU:
1. Is MU the low cost producer? It certainly seem so.<<
what is your basis for this? b/c mu repeats it and then their analists do the same? let me address this with facts. mu is selling parts below their gross cost. we know this. korea says they aren't. is korea's gross cost less than mu's? appears the koreans believe so. even the us dumping authorities think so as no sanctions were put on samsung for dram and 1% for sdram.
so samsung sells to the us at a price below mu's gross cost and they aren't dumping. that means they are at gross cost or below. when you look at facts, samsung appears to be the lower cost producer. when you ignore facts and listen to mu then they are the lowest cost producer.
i believe facts over a mangement that said "demand for dram continues to remain strong" as pricing was in the midst of a complete collapse and then said that they believed korea was nearly out of inventory last december - NOT! ;-) they have a poor track record of accuracy.
>>2. Does that make them profitable. No, it only makes them the one who loses the least.<<
garbage in, garbage out. the assumption appears to be when viewed in context of facts instead of a self serving and biased management.
>>3. Is anyone making money on memory these days? Doesn't appear so.<<
on a net basis, no. on a gross basis it looks like korea is making money. mu appears to be bleeding mercilessly while the koreans sell at gross cost. this could continue for a long, long time.
>>4. Is MU the technology laggard? No, in fact they may well be the technology leader. They apply advanced technology to old products, increasing the yields on them, and making the older produces profitable for longer. This forces the competition to "run" to the next generation of chips prematurely. The competition gets higher prices for the next generation, true, but much lower yields, and remains less profitable. The lower you are able to make your costs, the longer you are able to profitably stay with an older generation of chips. Many people believe that because MU stays with an older generation of chips longer it is a sign of weakness, but in fact it may well be a sign of strength. Recall about 17 months ago when MU made the crossover from 4MB to 16MB they were able to lower costs on the 16MB chips much, much faster than anyone expected because they had the technology in place. There is every reason to believe that MU is prepared to make just as dramatic change when they crossover to 64MB.<<
nice story. practice isn't so nice. samsung's gross cost is already probably lower than mu's based upon the facts rather than mu's proven unreliable "beliefs." samsung is on 0.18 technology and mu isn't close.
>>5. Does MU have the staying power to play the game? This is the big question. Certainly if they weren't the low cost producer, they'd have been dead a long time ago.<<
a logical fallacy. all the dram players are VERY competitive. nobody has a huge lead over the other leaders. the technology is available to all and they all have spent liberally. being the low cost producer or being in third place doesn't mean a whole lot, imho. it surely doesn't mean the difference between being alive today and going out of business a long time ago.
>>6. Can they outlast Korea? Same question as number 5. My guess is yes because the Koreans will be unable to buy sufficient next generation equipment, and will eventually be unable to compete, while MU will find a way to get what they need.<<
per a news article by dj on the mu thread, korea is at 65% capacity. that means they can increase output 50% or so nearly overnight, AT ANY TIME. personally, i think that number is too low. but the point that they aren't at full capacity is made.
the koreans will now play the game like mu does. they will postpone the large cap expenditures and use smaller cap expenditures to increase yields, INCREASE SUPPLY, and reduce cost.
the transition to 64 mb will make this problem much, much worse. supply will at least go up 100%.
mu spent over $7 a share to play the 16 mb game. their total earnings to date during this 16 mb cycle is well below a dollar. now they have to ante up another $7 to play the 64 mb game and it looks like the situation will be worse than 64 mb. this is a no limit poker game.
not a good business plan, imho.
>>My current position is on the sidelines.
Good luck,
Carl<<
that is the only longer term safe haven for mu bulls, imho. short term, anything can happen, although the $100 mm losses each q has to be a drag on the stock price and limit any upside. but, mu could pop in anticipation of dell's eps or something as ridiculous as that. |
