Nonsense. It is a fact that MU is a low cost producer or they would have gone out of business a long time ago. They could not have afforded the huge losses suffered by Siemans or the TI DRAM division, for example. It is a fact that they will be either the number 1 or number 2 DRAM producer in the world after the TI merger. It is a fact that cyclical businesses like DRAM have periods that are profitable as well as periods that are unprofitable. It is a fact that if a DRAM shortage occurs as predicted next year that MU will be hugely profitable. It is a fact that if prices remain at the current levels it won't take MU long to be profitable. It is a fact that MU has enough money to meet their capital budget, allowing them to remain a low cost producer for some time to come.
It is also a fact that MU could have a disaster in the TI acquisition. It is a fact that DRAM prices could tumble quickly after pre-christmas buildup season is over. It is a fact that just as MU could earn huge profits if things go right, they could earn huge losses should things go wrong.
These are all fundamentals, some good, some bad. I own the stock based on the fundamentals because I believe that at the current time the good fundamentals outweigh the bad ones, though the situation could change quickly. This stock is volatile because if things go well they could be hugely profitable, and if things go badly they could go broke. And the stock will continue to rise if it appears that the good scenario is increasingly more likely. Conversely it will fall if the bad scenarios become more likely.
This stock trades based on fundamentals, but not todays fundamentals. Rather this stock trades based on current perceptions of what will be happening a year or more in the future. Right now there have been enough plant closings, and there are strong enough PC sales, that the perception is that a shortage is increasingly likely a year from now, implying that MU will be massively profitable. Of course the fundamentals could change at any time, but to delude yourself into believing that there are no fundamentals can only cost you money when things go the other way.
Good luck,
Carl
|
