It is interesting to contrast the clear language in the 10Q with the purposely misleading, though I suppose truthful, statements made in the 12/23 press release. I don't think I am the only one who interpreted "total semiconductor memory output increased approximately 10%" to mean an increase in megabits rather than revenues. They also forgot to mention how much they were helped by much higher 16mb prices, a factor that will diminish rapidly going forward. They don't spell out the ASP for 16mb, or the mix of 16mb to 64mb, but the TXN fabs must still be pumping out a lot of 16 for the overall jump in ASP to be 18%, with the rise in 64mb at only 8%, though clearly Boise had some pretty major backend problems for total megabit output to drop by 10%.
10Q:
Net sales of semiconductor memory products increased by 10% in the first quarter of 1999 as compared to the fourth quarter of 1998 principally due to an approximate 18% increase in average selling price per megabit of memory sold, partially offset by a 10% decline in megabits shipped. During the first quarter
of 1999 prices for the Company's 16 Meg DRAM product increased significantly as that device reached the end of its product life cycle and customers sought lifetime-buy arrangements. The average selling price for the 64 Meg SDRAM increased 8% in the first quarter of 1999 as compared to the fourth quarter of 1998.
The decrease in megabits shipped was primarily due to backend production constraints associated with the Company's rapid transition to the .21u shrink version of its 64 Meg DRAM product. The effects of these constraints were partially offset by the additional sales of semiconductor memory products arising from the Company's newly acquired operations. These constraints are expected to be resolved in the second quarter of 1999.
Here is the statement from the press release:
biz.yahoo.com
The average selling price for the Company's primary semiconductor product, the 64 Meg SDRAM, increased 8% in the first quarter of fiscal 1999 as compared to the fourth quarter of fiscal 1998. The Company experienced a 60% decline in average selling prices per megabit for fiscal 1998. Primarily as a result of the modest price improvements, gross margins on semiconductor products improved to a positive 9% in the first quarter of fiscal 1999 as compared to a negative 10% in the fourth quarter of fiscal 1998. In the first quarter of fiscal 1999, total semiconductor memory output increased approximately 10% as compared to the fourth quarter of fiscal 1998. The Company's cost per megabit of semiconductor memory sold remained unchanged comparing the first quarter of fiscal 1999 with the fourth quarter of fiscal 1998 as cost improvements achieved in the Company's Boise operations were offset by higher costs per megabit incurred at the semiconductor memory manufacturing sites acquired from Texas Instruments Incorporated (''TI''). The Company's results of operations for the first quarter of fiscal 1999 include two months of operations for the acquired TI facilities. |
