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Technology Stocks : Micron Only Forum
MU 231.93-2.3%2:22 PM EST
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To: DavidG who wrote (34967)6/15/1998 3:01:00 PM
From: mike iles  Read Replies (1) of 53903
 
DavidG,

Gumport at Lehman talked to management and now he's estimating a loss of .70 versus earlier estimate of .50. He expects 16% sequential bit growth and ASP down 30% (from Q2). From those last 2 numbers I would estimate DRAM revenue at $230 million. Cost of goods should be where it's been for the last several quarters, about $270 million, and other costs (SG&A, R&D) will be about $100 million .... produces an operating loss of $140 million from the DRAM business ... have no idea what MUEI will contribute. In addition to the operating loss, Gumport expects a $35 million inventory loss. He figures MU held back shipping product because they didn't want to make a bad pricing situation worse. To my mind this is an operating cost pure and simple even if they try to dress it up as a one-timer (i.e. they have to run the plant flat out in order to get the efficiencies but they decide not to ship all they make because it would hurt pricing so they write off the excess production and call it an extraordinary event ... more weasel behaviour from the Boise slime) ... so my estimate of the operating loss (excluding MUEI) is $140 + $35 = $175 million. Since pricing is down sharply from the $2.53 (16 Meg. equivalent) that I used for the May quarter, this quarter will be significantly worse ... IMO ..

'hey, it's only an inventory correction'

regards, Mike
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