Larry, Also from the cc and eps report:
1. All the notes posted here about MU being mostly into 64 Mbit chips were wrong, as I said many times. Mu expects to reach crossover this quarter, just about the time NEC starts full production of 256 Mbit chips. <G>
2. The conf call and the numbers on the report don't jive. The touty co. claims that Mu is burning $200 mm per quarter. They burnt nearly $280 mm LAST quarter. Prices are worse now. They will be much worse with more capacity and if they ever decide to pay interest on any of their debt. My guess is that their burn rate with the TXN capacity and at current prices is closer to $350 mm.
3. The $350 mm will help them with this tremendous cash crunch. But it is not enough to get current with the technology. NEC, Hitachi and Mitsubishi, not to mention the cash-rich Taiwanese, find that much money under their sofa cushions. <G> The Koreans find it from US taxpayers via the IMF.
4. Unit inventories are huge. At what price will this crap finally be dumped?
5. Taking on new debt while you are running negative cash flow. Let's see how S&P and Moody's likes them cookies. <G> They will probably lose their cookies.
6. Pc sales growth, in units, continues to tank. Win 98 may be a very temporary bandaid if it can be priced low enough to go on a sub $1K box. Pc sales growth in dollars in non-existent. Meanwhile, DRAM capacity will grow at 70%. Are you folks buying a box with 640 MB in DRAM, when MSFT says Win 98 runs best with 32 MB? Hope not. <G>
7. We haven't even seen the start in the cut of IT budgets to handle Y2K. That is a big grizzly on MU's horizon.
Good luck,
MB |
