Sorry, Carl, I took my number from the last 10-k, quite outdated (Sep, 3). Yahoo says as of 12/24 about $3/share (or about $750 MM), but I am not sure you can believe that. The last quarterly (Dec) does say $1.9 Billions, but I think that $850 MM of that is earmarked for the old TI operations update, and they will need to invest some minimum (I could not find how much) in RDRAM (for the INTC deal, and if the stock drops below $31.5 INTC may get more shares, but I could not find the details, probably in an 8-k). My point is, in any event, that over the next five years I cannot see them generating $12.5 Billions in free cash flow (without discounting), thus making it difficult to justify current valuation of about $12.5 Billions. Furthermore, the number of shares is going to increase by some 30 MM shares, and until then they will have a debt load of $2 billion or so which even at a low interest rate of 5% will require another $100 MM per year to cover. That may leave them with little cash, unless they really start and bring some dough to the bottom line. They expect the TI operation to be a drag for at least a year, thus, IMHO, apart of the strong technical position the stock is in now, there are little fundamental reasons to justify the current prices. You give me some massive reduction in the industry's capacity to produce DRAM and then I will say that MU is on its way to control 20% or more of the market and have some pricing muscles, but we are not there yet.
Zeev |
