Ice:
I see you like the Niles "midnight phone call" routine. (g)
When I suggested that our Danny had received a late night call over on the MB thread with respect to Dell, a few folk took me to task for suggesting that such a thing could have possibly taken place. Amazing how Dan just managed to get his homework done in the nick of time once again. Actually, I enjoyed even more the other analysts, scampering to get their numbers revised before the report, pulling up trousers as they dashed off to their phones. (g)
Well, we sure have some interesting numbers from MU tonight, so let's take a look at them as provided and without the benefit of the 10-Q, which will no doubt fill in a few missing blanks.
Wow! What a giant jump in revenues in a single quarter. In Q1, the company's revenues were reported as $793.6 million (although tonight's report suggests $763.2 million,....adjustments for the TXN acquisition?), whereas this quarter, they shipped $1025.8 million. That's a jump of 30% IN A SINGLE QUARTER. This is even more amazing in light of the decline in PC revenues from $403.0 million to $323.5 million sequentially (a 20% decline), as reported by MUEI a few days ago. (Incidentally, I experienced difficulty in resolving MU's percentage ownership of MUEI with the two sets of figures provided in the separate reports. The MU report states that PC sales were $309.5 million in Q2 and $396.5 million in Q1,.... which does not jibe with MU's ownership percentage of MUEI. More "adjustments"?).
MU's memory product sales vaulted from $283.4 million in Q1 to $697.1 million in Q2, a 146% rise IN A SINGLE QUARTER. Spectacular and amazing,....that is until one looks at the preceding quarter, during which MU had the benefit of 2 quarters worth of TXN plant output yet produced a REDUCTION IN SHIPMENTS. It does not require rocket science to calculate that the rather amazing increase in memory revenues of Q2 results from close to 5 months worth of TXN plant production, (little of which reached shipping status last quarter). As well, one can only conjecture as to how much inventory acquired from the TXN "acquisitions" had been written down to zero, which allows a tidy profit to be booked when it is dumped by the new acquirer at any price (which ties in with the rumours that MU made large sales in the last two weeks of the quarter). Additionally, considerable product from MU's Boise plant was caught up in the admitted "back end constraints" (test problems) in Q1, so this too assisted in creating the mighty leap in revenues of this quarter.
While MU's revenues appear at first glance to have accelerated dramatically, it should be remembered that they were at this level back in Q1, 1996,.....without the benefit of a large acquisition,..... and produced more than $530.0 million in operating profits. The stock price at that time is worth looking up for the comparison with today's insane price. (g)
Well what about that amazing profit? Part of it of course derived from Micron's parental percentage ownership of MUEI's $.04 reported profit. What is noteworthy is that given the size of the memory sales and the probability that a considerable chunk of the incoming inventory from the TXN "acquisition" had been severely written down, the profits look worse than puny. They look worse still, given the pricing respite provided by the Koreans during MU's Q2, as they sorted out the Hyundai/L.G. Semicon merger and its associated strikes and non-shipments. Memory chip prices are now declining again, so good luck in Q3.
Do other things suggest the need for further analysis, once the 10-Q is at hand? They sure do.
- I note SG&A is down sequentially, even though revs are way up. Of course. That is always the way it works. (g)
- And that massive explosion of memory product sales was achieved with virtually no sequential additions to COGS. Zowie Batman,....these guys are magic!!!! (g)
- Interest expense is at $11.7 million, up just a bit from the previous quarter (interest INCOME of $1.8 million). But wait 'till June, when the BIG interest bill has to be paid,....that two year holiday is almost over boys. (g)
One could go on and on, but it is not necessary. These numbers will not excite any analysts who dig beyond the first page. The stock is unlikely to benefit from this distortion of reality.
More to follow once the 10-Q is at hand.
Delightfully, we can now look forward to an unimpeded selling frolic as TXN and INTC compete at the bid. They too have analytical skills and understand the business. (heh, heh, heh)
Best, Earlie |
