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Technology Stocks : Micron Only Forum -- Ignore unavailable to you. Want to Upgrade?

To: Skeeter Bug who wrote (46178)	6/8/1999 5:40:00 PM
From: phbolton	Read Replies (3) \| Respond to of 53903

Gruntal fails math, history, reality tests: "Our EPS estimate for the third (May) fiscal quarter, $0.10, is based on the assumption that MU will increase Mb shipment approximately 22% sequentially, benefiting from production increases and inventory from the previous quarter. Last quarter, Micron dramatically increased its megabit output more than 75% on a sequential basis. We are also applying an average selling price (ASP) of $7.00," Lets see a 22% bit growth times an average ASP of $7 gives $8.54. Opps! 8.54 is a lot less than the 9.25 ASP of the prior quarter and even lower than the alleged $9 at the start of the quarter. (their 22% growth/$7 ASP model actually leads to a loss of 40 mil or so which is an EPS of about –0.15) A 22% bit growth also means an increase in COGS but lets not worry about details. Also, if ASP is $5.50 (actually its south of $5) what does this mean for next quarter???? They'll need a 40+% bit growth just to stay even. "Micron's balance sheet is strong and cash rich, totaling approximately $1.8 billion or $6.55 per share." Uhh, don't you have to deduct debt to get the net cash? An unbiased reading (Zacks) puts net liquid at 600 mil at start of quarter. This $1.8 bil statement is irresponsible. And isn't some of that "cash" actually encumbered by the terms of the INTC and TI deals? "We believe that prices will decline at an orderly rate, in line with the memory learning curve, rather than anything similar to the sudden 30% drop in less than 45 days which just occurred." "When the May quarter started, 64-meg DRAM spot prices were above $9.00, but as the quarter progressed the spot market collapsed, with the prices going as low as $5.50." Lets see, from 9 to 5.5 is a 40% drop. From 9 to 5 a 45% drop. If they couldn't predict this most recent drop why believe their predictions for next year? "MU stock is currently trading at 11.5 times our fiscal (August) 2000 EPS estimate of $3.00, which represents a 36% discount to the company's projected long-term growth rate of 18%. We arrive at our $100 price target by applying a P/E multiple of 33.3" WOW! And this for a company with a negative revenue growth rate the past few years. A P/E multiple of 33 for an 18% growth rate! "while every U.S. supplier of DRAMs, with the exception of Micron and Texas Instruments, exited the market after massive losses. …. thus making Micron Technology the only U.S. supplier remaining in the DRAM industry….. International Business Machines (IBM-NYSE-$221.18-Hold) is almost entirely out of the market…" Is IBM in the market or out? If in, then MU is not the only US supplier. Its one or the other not both. Does embedded DRAM count?