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Politics : Formerly About Applied Materials
AMAT 242.41+5.0%3:59 PM EST
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To: Big Bucks who wrote (20921)6/27/1998 10:07:00 AM
From: David Rosenthal  Read Replies (2) of 70976
 
BB,

It seems logical though that Micron desires to keep profitability as high as possible. If they massively increased production it would be akin to going bungee jumping with the rope tied around your neck! Yea, you got all the right gear and timing but you just didn't implement the strategy very well, that would be listed on the coroners report as "Suicide due to stupidity". I hope Micron is smarter than that, they seem to be survivors and are trying to outrun/outlast the competition.

It does seem logical but MU's history suggests otherwise. In their last report they showed that they had developed a massive inventory. They need to produce full out to minimize cost per unit. Clearly they were betting for prices to increase without care that they were adding to the problem. Now, while their competitors are trying to decrease supply MU is buying fabs and intending to upgrade them to volume producing beasts. I think they are taking that bungee jump and betting that white knights like the U.S. Government and TI to keep bailing them out till they outlast their competitors. MU has demonstrated that they can make money in the environment of undersupply. IMO, their current plan for today's environment doesn't look that smart. Who is going to give them the next money infusion when they are out of cash next year?

Dave
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