Skeeter,
larry, mu went up b/c mu management said korea was probably out of inventory and so the reasonable inference is that prices would move up and mu would become profitable. since that was an irresponsible and false statement, which i pointed out AT THE TIME, it didn't occur.
OK, OK, OK !!!! I can't take it any more. I have heard this nonsense for the last time. Skeeter, you and Mike Iles have been spieling this absurd gobledygook for months now and even a third grader could have corrected you if he had the time.
I kept asking you "what is the difference now, from the past year, that may be causing MU to drop in price, since you and Mike iles have been saying every day, week and month it should be in single digits...and you were both WRONG?"
It is not because MU said that Korea is out of inventory, it is not just b/c prices are dropping on Dram.
In January when MU came out with lower than expected earnings it when up in price b/c:
1) The asian crisis was thought to be subsiding
2) Koreans were in financial trouble and will not be able to expand much beyond their current technology
3) Koreans and Japanese were changing plans for the long term, moving out of DRAM and into logic chips with higher margins and lower competition
4) Prices were expected to stabilize as existing capacity begins to catch up with projected future demand in the year 2000.
5) MU, as a low cost producer, was still selling memory above its production cost and therefore could stay competitive and eventually start showing profits.
What actually has happened in the past six weeks is the Asian crisis has gotten significantly worse. Korea is still in trouble and you can expect to see some bankruptcies, but now Japan and Taiwan are starting to feel the effects of the Korean and rest of the world problems. As a result the currencies are now in complete turmoil.
How does this effect the bottom line to commodity driven companies. it is Disasterous. THE BOTTOM LINE IS INDIRECTLY PROPORTIONAL TO THE MOVEMENT IN THE COMPANIES CURRENCY. PERIOD.
You can take a commodity company like Newmont, Archer Daniels and have a 15 - 30% margin and result in profit and then have the US dollar increase an equal amount and all of sudden nobody is making money anymore. Now with Micron, which was looking into the latter of 1999 and 2000 for a profit, that is all gone now.
The Us dollar is now so overvalued compared to Japan and Taiwan, which were MU's biggest threats, that now they have no firm ground to stand on.
Now go do some homework and plot the drop in Asian currency to the SOX and to MU and you will find a direct correlation. MU is just tracking the SOX for the past year which has been tracking the exchange rates with Asia.
All this other nonsense you and Mike have been selling would never have moved MU one way or the other let alone from 22 to 39 and back down to 21.
...Your comments are utterly ridiculous. You are right about MU dropping, but for all the wrong reasons.
DavidG |
