To All,
I was at the presentation today and here's the major facts to report:
Earnings: *People will be suprised at our results for the quarter. I'm not telling you we had a blowout quarter, but we did not lose money, and are comfortable with estimates*. I read this as .03 being realisitic, so anyone thinking otherwise is deluding themselves.
The company is shoring up their balance sheet, has a $400 mil line of credit which is barely touched, and a couple hundred mil in cash on hand. These guys will be here to stay.
Shelf registration in place to spin off a majority of MUEI. There go those profits... Could take up to 2 years to complete.
Cap equipment spending 475-500 mil for fiscal 97 vs 1.7 Bil 96.
1x16 configuration began outselling 4x4 as of last month.
Recent pressure in DRAM prices due to softening demand of retailers (*40% of market slowing down*). Says direct model sellers will continue buying. Uncertain outlook for pricing in January, but that month will signal direction. Didn't seem too upbeat was my perception.
SDRAM ramping up. Look for summertime impacts on operations.
Microstamp booked $900,000 to date. Targeting cash flow positive by next summer. Hoping for $10 billion market in 10 years. Won't be significant for the company until 1998 however. Begin focusing second half of 1997.
Flat panel display production ramping up. Private placement underway for the subsidiary; multiple patents awarded, environmentally sensitive tech (no mercury), low power, video capable, wide angle viewable. No significance until mid 1997.
Kipp was asked about contract price (8.25 - 9.50) shipments vs spot price. Very roundabout answer which seemed to imply much of the contract business is based on spot price at time of shipment.
I asked about 64 bit production by their competition, and the answer implied that demand is not huge yet, so they don't need to move on that until more buyers need it.
Lehi will be kept as current fabs running at capacity. Slight construction activity continues, but no plans to finish it. 1 year needed for completion, plus a few months to ramp production, when (if) that decision comes. Could be used for susidiary construction site (Microstamp, FED's, etc).
SRAM too competitive to be profitable overall, but select opportunities exist.
Crucial technology seeing alot of hits, but it didn't seem like any major sales were happening. Mentioned that most box makers were trying to sell boxes and didn't care too much about direct memory sales, but there still was some friction.
My take on it all... MU is not going to turn things around until DRAM stabilizes better. Very uncertain first half of 1997 leaves market valuations quite vulnerable too a setback. Kurlack is going to have to cut his numbers and issue a hold based on price. Concerning today's spike, some people left the room as soon as higher bit growth suprise (?) was stated. That started the rally, and it fed on itself as Bloomberg, and CNBC misreported that MU is predicting over 80% bit growth for 1997. That number is for the industry as a whole, not company specific. This sent people into a buying frenzy, but how can it continue if there is no pending blowout earnings number on Monday?
This one is gonna' trend to fair value real soon, and it ain't up here...
Good luck to all as I'm leaving for a 3 week Colorado trip. Can't pass up all that fresh pow pow!
Peter Shaw |
