The following was sent to Squawk Box on Saturday morning...
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Dear Sir or Madam,
Micron analysts have made a MAJOR mistake in their analysis of Micron Technologies' recent earnings report. Both Dan
Niles
and Tom Kurlack have based future earnings estimates on MU shipping 10% more Mbytes last quarter compared to the prior
quarter. MU went out of their way to change their terminology, in my opinion, to try and fool investors and analysts. Fool
them they did. The resulting research reports are faulty and based on incorrect data. GROSSLY incorrect data. Data that
misleads regarding the performance of MU last quarter and the current state of the business, as well as potential future results.
The fact of the matter is, as brought out in the most recent quarterly filing, that Megabyte production was actually DOWN
about
10% - not up 10% as the MU management team would have us believe via their press release and as both Mr. Kurlack and
Mr. Niles state in their research reports. Therefore, the analysts' earnings models for MU are TOTALLY WRONG due to the
garbage in / garbage out phenomenon.
Here are the links to some Silicon Investor posts that elucidate on this matter.
1. Message 7277114
2. Message 7281745
3. Message 7308469
4. Message 7310265
Adjusting for using the CORRECT DATA yields...
5. Message 7311628
Why did MU change the clear language that they used in prior releases?
6. Message 7316915
7. Message 7317898
Why is this important? Micron was Merrill Lynch's #1 commission generator in 1997 and probably in 1998. If it wasn't the #1
generator in 1998, it was close. Here is a company whose management changes a clear and consistent pattern of reporting that
they've established as a modus operandi with the apparent intent to mislead their readers - AND IT WORKED. The
supposed BEST analysts in the semi
business took the bait. They ran these erroneous numbers into their model and one, Mr. Niles, came up with a $200 price
target!
Also, and of paramount importance, this incident shows the POWER of the individual investor sharing information over the
internet. David Gahm and Thomas Busillo, although not
paid analysts for major firms and not rated as II All American, have unveiled the truth of Micron's report when the very well
paid
"pros" missed the truth by a mile and published what appear to be blatant falsehoods and bogus estimates derived thereof. Is
the truth supposed to come out this way - unpaid amateurs (in the sense of no direct salary - these gentleman are not amateur
investors) unveil the TRUTH over the internet while million dollar analysts promulgate falsehoods? The irony is dripping like a leaky faucet.
The input numbers have now been shown to be erroneous. Will Mr. Niles have the decency to update his analysis and
PUBLICLY REDUCE HIS ESTIMATE (BASED ON THE NEW INPUT AND THE SAME FORMULA)? will the
formula change so he can maintain his estimate? Will he ignore his error altogether?
I would wager he ignores this HUGE error he made unless his error, for which he is paid very handsomely to avoid, is brought
into the public debate.
Hence, this letter to you at CNBC Squawk Box. I believe that Mr. Niles isn't interested in the truth. Rather, I believe he is
interested
in maintaining a high Micron stock price and making it go ever higher in this high flying market "Get while the gettin' is good," as
they say.
Since reducing his estimates won't achieve this goal, I
believe he won't do it unless pressured by public knowledge - even though the data he put into his model is WRONG. VERY
WRONG. That is why I am asking you to do a story on this issue.
The reader of this not may not realize the impact of what is actually transpiring here in real-time. I believe he/she will in the
future, though. Looking
back on the BULL of bull markets, this will be a prime example of where a company manipulates language to mislead investors
and the analysts play right along with the game - ALL THE WHILE MISLEADING AND SOAKING THE AVERAGE
INVESTOR in the end. Of course, perhaps Micron management inadvertently changed terminology and this just happened to
suit their self interest and the
analysts inadvertently missed their mistake and, "ooops," were never made aware of it so they'll continue to stick with the
current bogus estimates.
However, if you bring this to the attention of the investing community they can't plead ignorance and the public has a chance to
know the TRUTH. When their error is brought to their attention, they should be very happy to correct their egregious error.
Again, please notify them by broadcasting these facts over the air. The average investor, who relies on you for TRUTH, needs
you more than ever in order to make educated, as opposed to ignorant, MU investment decisions. This story is an opportunity
that doesn't come around often. I just hope Squawk Box has the insight to realize this.
What could be more important to your viewers than knowing about a mysterious change in the wording of a quarterly report
that misleads the best analysts in the semiconductor world, who then report erroneous earnings estimates and corresponding
expected stock values, in one of the most popular stocks on Wall Street and all of this was exposed, real-time, via the
internet? I would venture very little! |
