b, you haven't been around this thread long. here is the scoop. some folks do real research, understand economics and don't have axes to grind. those folks realized a glut was occurring when all the cheerleaders were just "rah, rahing." oh, it feels good to rah, rah. feeling good isn't the point. understanding markets is.
in 1997, there was a group of folks that said 1998 was a disaster year while the pros and bulls were saying, "nope, mu's gonna make $3.00+ next year and you guys are just sour. the stock is going to $60+ b/c the prospects are so good."
no matter how many times the bears said that the koreans were holding inventory and that they would have to unleash it and the results would be disaster, they didn't listen. the stock went up, the analysts rah, rah (tom kurlack was quoted as saying mu was in "the best of all worlds" about a week before he downgraded the stock and it lost 2/3 of its value in a short period of time - thanks, tom).
anyhoo, 12 cents isn't much for a stock in a mature commodity market serving a market where revs are shrinking. look at cash flow. i bet mu spent over $200 million to make that $30 million. they'll spend another $200 mil next q.
asps are down from last q's levels. the inventory holders are releasing now. it seems that mu was a participant this time - they weren't in 1997. next q looks like a dime or less. but, you say, mu will cut costs. yes. however, those cost cuts result in steep ramps of output which, voila, directly puts pressure on pricing.
mu's debt has skyrocketed just a few years after the largest dram boom in history. spend a dollar to make a dime and you'll soon find out why - no matter how you do the accounting. interest payments are now hitting the bottom line. more to come. how will the principal be paid back when they spend $200 mil to make $30 mil?
mu's competitors are not just companies, but whole nations. you think korea will give up? not a chance. their govt will intervene when push comes to shove.
the end market is tanking. retail pc sales were down 16% in feb. piiis were out in feb. units up a whopping 1%. why hold back b/c piiis aren't available when they are available? the fastest growing pc market is the $600 and under market. not too many 128 mb boxes there, my friend.
this time is different from 1997 for 2 reasons, one good and one bad for mu. 1. every dram playeris more cautious as they were badly spanked in what was supposed to be a boom year (except for those with eyes to see...). 2. units and mb per box were growing rapidly (20%+, 80%+) in 1997 and 1998 and now they aren't (1-5%, 30% or so).
muei has one disaster after another. microstamp was doa (mu touyted this as a billion ollar product ;-).
will intel shell out another $500 to keep mu floating? will applesauce try and punch out a rambus exec next? will he dis' rambus? will kip ba-blowhard tease the weak minds of the devoted?
find out in the weeks to come as the micron world turns.
>>No one really knows where this wretched stock is going to go<<
with that, we all can agree. it is going to the low teens b/c that is close to fair value. i just have no idea when, or, if it will go through $100 first.
i wonder if off by niles invites all the execs of companies he follows to his parties??? |
