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

To: Zeev Hed who wrote (47137)	7/14/1999 8:31:00 PM
From: TRIIBoy	Read Replies (1) \| Respond to of 53903

MU Analyst's big mistake: From Fleckenstein's column Another fish story... And as long as we're on that subject of no analysis I submit the next example, which is not the result of no analysis, but just of out and out making stuff up without doing any work. Normally when I talk about the dead fish, I don't mention their firms, but this is so blatant that I have to make an exception to that rule, as just did with the other dead fish. This dead-fish story involves Micron (MU), which I haven't talked about much lately. The company's stock has just exploded since its terrible quarter, on the back of people believing that the price of DRAMs is going to go up. The price of DRAMs has bounced some, and that's mostly because parts have been held off the market. Today I'd like to quote from DLJ's semiconductor analyst, "Our sources in Taiwan estimate inventories at Micron have fallen to 5 million chips, one fourth their level of late June." Well, if this guy picked up the phone and called the company, he'd find out that inventories are north of 80 million, which of course is up from 60 million at the end of the quarter. Almost anyone could have found out that they weren't at 20 million, which he implied. So the reason prices have lifted is because Micron has chosen to build inventories instead of selling products. It's a wonderful thing, this new business in the mania. If you're supposed to make something, and you don't like the price, you just build inventory and let the price bounce around and somehow magically that's good news. I don't why Micron doesn't just shut down the fabs. Then the company wouldn't have any capital outlays, it wouldn't have to lose money on parts and it could just buy stock. It would be an even more wonderful business.