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To: Patrick Hennessey who wrote (46245)	6/11/1999 12:19:00 AM
From: Skeeter Bug	Read Replies (3) \| Respond to of 53903

patrick, if the dram business is so great, why is mu in the hock for $1.5 billion and have to issue mondo shares almost immediately after the best of times anyone could imagine? reported eps is not the same as cash flow - mu has never had it. iow, how long can i spend $5 to make $4? eventually, i run out of dough (and take on debt, sell pieces of my business and issue shares - sound familiar? ;-) the key here that i think is very important is that there will be an inflection point. profits will decline this q and decline a lot. how can you have a recovery when you are losing more money now than last q? that is a recovery in reverse, isn't it? mu is trading on gagga now and may continue to do so until the eps release. i will continue to buy higher strikes and cheaper puts all the way up to earnings. a 25 cent + short fall in eps that debunks the dram recovery thesis will not be rewarded. all imho...

To: Patrick Hennessey who wrote (46245)	6/11/1999 12:25:00 PM
From: A. A. LaFountain III	Respond to of 53903

Pat: re "As long as this is a remote possibility" At least we can agree on the remote part! Four things to remember about 1995: 1) The build-to-plan nature of the PC vendors for the W95 rollout led to a spike in DRAM demand that was unsubstantiated by end-user consumption. 2) The delayed crossover to x16 16Mb parts distorted 4Mb pricing - for two years. 3) MU was making parts in 1995 on equipment that had been heavily depreciated, so costs were (artificially) low - annual DRAM sales were $2.50 for every $ of s/c PP&E in F95, but this year that figure will be below $1.00. 4) PC revenues were only 15% of the revenue stream; they're much higher now, with gross and operating margins well below the numbers you cited for Nov95. ---- Most interesting thing, though, is stock price action. MU's price peaked at 17x the most recent qtr EPS annualized, and MU's P/E ratio was 9x when the quarterly EPS peaked a few months later. I believe that much of the excitement about a cyclical recovery in DRAM profitability tends to conveniently overlook the multiple compression aspect of stock pricing. - Tad LaFountain