Hi Michael,
>Since the majority of pc makers have a net profit margin of less than 5 pct.,
Not true. Margins are higher than this.
>Also, I think your 3 pct. is based upon a $6 DRAM price and 16 MB of DRAM.
Kingston is advertising 32MB for $199 retail today. A 16MB SIMM has eight 16Mb chips, plus $10 adder, resulting in a mfg cost of $82 per SIMM at current DRAM prices. Total mfg cost for 32MB is about $164. Assuming the average PC costs $2000, this is less than 10% of the cost of a PC. A 30% price increase amounts to less than 3% of the price of the PC. Regardless of whether PC makers eat this cost increase or not, it will have NO effect on demand for PC's.
I believe Samsung WILL hold the line until 64Mbit crossover occurs, which at this pace will start in 2 months. After that, they will continue to cut prices for 64Mbit resulting in a gradual, steady demand shift from 16Mbit to 64Mbit. At that point, they will start to unload their 16Mbit DRAM, and prices for both 16Mbit and 64Mbit will coordinate a steady decline, with 64Mbit demand continuing to ramp up. Let's see, I'll give 16Mbit prices 4-5 months at these inflated price levels.
You know, I've never traded options before, but I think I'm going to look into it now. Perhaps I might be in the market for 10/97 puts. Anyone have advice for a rookie options trader?
Josh |
