Re: My "bias" and objectives
As I have previously stated, I just try to ascertain the facts. I am not a "forever bear" about any stock, and in fact have been criticized for moving my recommendations around too much (in an effort to recommend purchase when they appear to be low and to avoid purchase at what appear to be high valuations).
I'm sorry, I don't understand your response.
"This ("Micron Technology is the largest supplier of DRAM memories [sic] in the world with 15-17% market share after the acquisition of Texas Instrument' DRAM assets.") was actually fact at the time it was written. When MU took over TXN fabs the combined output was some 60% increase which was considered close to Samsung if not more...and certainly more than LG and Hyundai individually.
Since the acquisition changes ...occured and one TXN fab was closed and another was not used for non-production work while the remaining TXN fabs and MU fabs were upgraded to .18microns."
Well, it wasn't fact, no matter how it's sliced:
1) Micron is not now, and has never been the largest DRAM vendor. On a standalone basis, the highest level it has appeared to reach as a percentage of SIA-reported DRAM revenues is about 13%, well below Samsung's 18-20% for the past couple of years.
2) While I have not seen the nine-months' figures, MU's SEC filing clearly shows TI's memory operations suffered a 50% revenue decline in the first six months of 1998. As the market was down 35% through June (source: SIA), TI clearly lost share in the first half of 1998. Given its weak position in 64Mb parts, it's probably safe to assume that TI's share loss in 3Q98 was even worse.
I calculate that Micron's DRAM revenues in 2Q-4QF98 (Dec/97 to Aug/98) were down about 31%. As the SIA data was down about 37% over the same timeframe, MU picked up some share (and was able to move up to the 13% share referenced above).
3) Of course, the statement is couched entirely post-acquisition, for which we have suitable data (i.e., Micron's 1QF99 report of $410 million in total semiconductor revenues compared to the equivalent three months' of SIA DRAM revenues of $4,107 million, or just under 10% share; of course, you need to take out the flash and SRAM revenues and that lowers the numerator, but even if you bulk it up by 20% to reflect DRAM production that was not able to be sold in the quarter, you still only have 11% share).
These are facts, supported by either company-released data or data supplied by the industry trade group or both. The statement in the 1/15/99 report was just plain wrong.
Frankly, I'm a little taken aback by your questioning of my objectives when it is so painfully clear that the other analyst had either (a) an agenda that led to a distortion of the facts; or (b) an inability to perform what should be considered basic levels of fundamental research.
I anticipate that there will be a time when MU's valuation and my analysis of its future are in alignment so that a purchase recommendation is warranted. After all, I am a big believer in the power of the semiconductor cycle, so it stands to reason that at some point the path to sustainable enhanced earnings at Micron and other commodity vendors will be attractive; given the volatility of the market, such an enhanced outlook could well be purchased at attractive prices.
I'm not a forever bear, but over 20 years of doing this has led me to be valuation conscious (perhaps to a fault, but who's perfect?). When competitors were offering three-year target prices in order to justify continued purchase, my instinctive reaction was "What even happened to multiple compression?" After all, in every cycle, P/E tends to come down as the E goes up. It seems to me that much of the glorious stock price outlook was predicated on the multiple remaining constant as the cyclical improvement led to higher earnings; maybe that happens, but seldom in this universe.
Most importantly, my objective on this thread is to help sort out the facts and, in so doing, perhaps make the acquaintance of what appears to be some very well-plugged in and thoughtful people. I hope I'm doing the former and the latter has already started. - Tad LaFountain |
