GP,
There are few reasons for my preference of keeping Cirent over Micrus. The first one you already hinted on. There isn't a huge difference in technology regarding geometric size. Yes IBM will have copper, perhaps, faster than Lucent but in the near term I don't see this as a major advantage.
The big difference is dollar commitment. The dollar commitment Cirrus has in Micrus vs. Cirent is huge. You also hit on the fact that the overseas foundries such as TSMC are as good as anything produced on shore. Also recall that capacity is no longer an issue. I also do not see Micrus being loaded even with the upcoming products from mass storage and Crystal. I just do not believe there will be enough volume to keep Micrus loaded. Besides, a vast majority of the markets are in the far east and with the foundries, assembly and test there, it makes sense to produce these products where they are going to be used (there I go assuming that Cirrus management knows what makes sense).
Lastly, I believe Cirrus and Lucent have other interests. No, I don't think Lucent is interested in merging/buying/acquiring Cirrus (although some people would like to believe this) but I do believe that Lucent and Cirrus would make a good partner in many of the products Cirrus is producing.
In summary, I would like to see Cirrus drop Micrus if they could, stay with Lucent only because of the perceived partnership, and make use of the overseas foundries. The key here is can they get rid of Micrus without having to give an arm and a leg? Maybe. As a side note I read where IBM is entering the chip commodity market. Maybe they need more capacity? Lets make them a deal.
Calvin Scott
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