>>My point is that there is a
reasonable basis for valuing MU at $50.<<
now, carl, you are upping your analyst ante by a lot. amzn is ridiculous so mu is fairly valued.
let's talk some business reality. mu was not the low cost producer the last time the doc checked. i understand that some people who are very familiar with micron AND their korean counterparts have said that the korean counterparts are, in fact ahead of micron.
micron's cash reserves will be about gone 12 months. that is at breakeven levels. they will still have the debt that provided the cash - $1 billion and growing every month). remember, $500 mil has to go to rdram and if that is a bust then they have some big problems.
64 mb dram is 10% off its recent highs as we speak - and we aren't even in january yet. mu needs to make $250 million free cash per q just to stay competitive. they aren't doing it. oops, that was before txn. but they aren't even running txn, are they? bet they a5en't depreciating it yet, either ;-) they'll probably need $400 million a q in cash flow to stay competitive.
the koreans have some troubles of their own. however, they also have the national clout to ensure their survival AT ALL COSTS.
all this is w/o an inventory correction. after 4 years of absolute boom times, mu was nearly out of cash after 2 bad qs. remember, a lot of cash sitting on u's balance sheet is muei's and mu can't touch it.
the first 6 months of this q will suck. the third q will probably be weak and the 4th q will be a time of severe uncertainty. yields will increase. efficiencies will increase. output will increase dramatically. dram quantities per box will not grow as fast as they have been growing - less marginal benefit.
btw, the fact an amzn is even mentioned to justify a mu stock price is indicative of the weakness with which you argue the point. |
