John, Barron's provides another "great moment in financial journalism".
interactive.wsj.com
Take prices of direct random access memory chips, or DRAMs,, please!
[A little Henny Youngman, anyone?]
...which essentially contain the short-term memory of personal computers. After a long period of weakness -- caused primarily by the Asian economic crisis -- they're suddenly on the rise, again. And unlike earlier advances, this price increase may have some staying power.
"In a little over a month [they've] gone up 50% in price," says David Wu, analyst at ABN AMRO.
In some cases, even more. DRAM prices in Asia are as high as $7 today -- up from just $3.80 four weeks ago, according to Greg Mischou, senior semiconductor analyst at Warburg Dillon Read.
That's all well and good, but I'm wondering where the part where they talk about MU's contract prices went. I guess when you're accentuating the positive, you can't be bothered with asking the analysts 1) how much they actually sell on the spot market? 2) Have their contract prices also increased "50%" and "even more"? Or they still significantly lower than their ASP of "just under 7.00" last quarter?
Back in February, when Micron stock sat at 62 7/16, only a few notches below today's 67 13/16, Weekday Trader said bad news about slowing revenue growth at Dell Computer and cuts in microprocessor prices by Intel shouldn't have dragged Micron down, too, because future PC sales growth looked solid, and the increased use of graphics would accelerate demand for memory chips.
Initially, the stock rallied nicely to peak near 80. But a wider-than-expected loss in Micron's fiscal third quarter (which the company blamed, in part, on cutthroat pricing and lagging PC purchases) sliced the stock price in half from March to July, when it touched down at 34 ½.
Excuse me?
No, let me restate that...
EXCUSE ME?!
Are you suggesting that MU "rallied nicely to a peak near 80" after your February 18th piece?
Why don't you [put] this in your [Montblanc] and [smoke it]:
18-Feb-99 62 62.75 58 62.4375 6128100
19-Feb-99 63 65.3125 62.5 64.125 3915000
22-Feb-99 63.9375 68.75 63.4375 68.125 3615500
23-Feb-99 70.625 72.4375 69.0625 70.3125 6534400
24-Feb-99 70.3125 75.4375 70.1875 72 8249800
25-Feb-99 70.875 71.125 66.25 66.8125 7580200
26-Feb-99 59 59.375 54.75 57.625 13269200
1-Mar-99 57.625 59.125 56.5 57.5 6716500
2-Mar-99 56 56.4375 54.125 54.25 5917100
3-Mar-99 55 55.125 51.9375 52.625 5098700
4-Mar-99 52.875 56 52 53 7441400
5-Mar-99 55 60.25 54.5 59.9375 8488400
8-Mar-99 61 62.8125 56 56 6549500
9-Mar-99 57 59.4375 53.75 55.125 6928700
10-Mar-99 55.125 55.625 53.375 54.75 4525300
11-Mar-99 57 57.5 51.875 54 8574200
12-Mar-99 53.5 53.5 49.875 50.375 6037800
15-Mar-99 51.5 51.5 48 49 5818400
16-Mar-99 49.75 52.625 49.375 51.0625 7920900
17-Mar-99 51.1875 53.4375 50.6875 53.0625 4908400
18-Mar-99 53.0625 54.625 51.375 52.0625 5145300
19-Mar-99 52.5 52.75 49.375 50.5 4320800
22-Mar-99 50.75 54.625 48.875 53 5774300
23-Mar-99 52.8125 53.875 49.5 50.625 5079700
24-Mar-99 50.625 53.5 50.25 52 6459700
25-Mar-99 53.5 53.5 47.25 47.4375 13892300
26-Mar-99 47.375 49.25 46.5625 47.125 5798700
29-Mar-99 48.5 48.75 47.0625 47.3125 3887400
30-Mar-99 47.5 48.5 45.25 45.3125 4510600
31-Mar-99 46.25 48.25 45.8125 48.1875 4973400
1-Apr-99 48.625 49.625 48.25 49.3125 3218100
5-Apr-99 50.75 52 50.3125 51.5 4244500
6-Apr-99 51.625 53.9375 50.9375 53.75 3968500
7-Apr-99 54.625 54.625 49.625 49.625 4079600
8-Apr-99 49.6875 49.6875 46.5 47.125 4451700
9-Apr-99 47.125 49.5 47 47.875 4003300
12-Apr-99 45 46 44.0625 44.75 4534100
13-Apr-99 44.875 45.625 42.375 43.625 4366800
14-Apr-99 44.5 45.125 42.625 44.625 4446800
15-Apr-99 45.0625 46.875 43 46.6875 4187600
16-Apr-99 46.5 46.5 45.1875 45.375 2827400
19-Apr-99 45.75 46 41.5 44 2594700
20-Apr-99 44 45.25 42.125 44.25 3623000
21-Apr-99 44.5 45.5 38.875 41.5 9299700
22-Apr-99 40.75 40.75 36.4375 36.9375 14070200
23-Apr-99 37.375 38.25 36.5 37.875 7440500
26-Apr-99 38.375 38.5 35.6875 36.125 5337600
27-Apr-99 36 37.625 35.25 35.75 5490700
28-Apr-99 36.5 38.5625 36.125 38.375 7088300
29-Apr-99 38.125 38.25 36.375 37.375 4824300
30-Apr-99 37.375 38.6875 36.125 37.25 3402000
3-May-99 37.5 38 36.8125 38 1592600
4-May-99 37.625 39.25 37.25 38.1875 3583500
5-May-99 38.875 41.25 38.125 41.125 4142400
6-May-99 41.25 41.5 38.1875 38.4375 3862300
7-May-99 38.5625 39.125 37.75 39.0625 2297300
10-May-99 39.125 40.9375 39 40.1875 2543100
11-May-99 40.1875 40.4375 38.3125 39.3125 3710800
12-May-99 39.3125 41.1875 39.1875 40.1875 3365900
13-May-99 40.125 40.5625 37.5 37.5625 4032000
14-May-99 37 38 36.625 36.9375 3268800
17-May-99 36.9375 37.75 36.4375 37.4375 2165800
18-May-99 37.3125 38.25 37.125 38 2530000
19-May-99 38.875 39.25 37.625 39.125 3228700
20-May-99 38 38.625 37.125 38 3064400
21-May-99 38 38 37.25 37.3125 1631900
24-May-99 37.5 37.9375 35.5625 36.1875 3691100
25-May-99 36.25 37.25 34.5 34.5 3979000
26-May-99 35.25 35.875 34.25 35.625 2350300
I'm missing where it peaked, after 2-18-99?
I'm probably missed it because it hit it's peak on 2-4-99 - two weeks before your article came out.
And another thing:
But a wider-than-expected loss in Micron's fiscal third quarter (which the company blamed, in part, on cutthroat pricing and lagging PC purchases) sliced the stock price in half from March to July, when it touched down at 34 ½.
Only two months off on the low? Hey, not bad.
34.25 on MAY 26th.
And while we're at it can you explain how it is logically possible for a "wider than expected loss in Micron's fiscal 3rd quarter" to have "sliced the stock price in half from March to July, when it touched down at 34 1/2"...
...if the May 26th low came roughly FOUR WEEKS BEFORE THOSE EARNINGS WERE EVEN REPORTED?
And this one:
"A few years ago," explains Mischou, "a dozen companies were chasing the DRAM market." But in the last year, Micron bought Texas Instrument's DRAM operations, Hyundai merged with LG Semiconductor and Hitachi and NEC teamed up on a joint venture. Together, those four companies now account for over the 70% of the market.
Um, the phrase, "those four companies" - what four?
MU/TXN, Hyundai/LG, NEC/Hitachi - three.
I guess if you throw in the leader (?) in the industry, Samsung, it makes sense. Unfortunately, you didn't. But of course, as we all know from that crack team at CNBC, "Samsung is considering entering the memory chip market", so one can understand the caution.
That technology allows manufacturers to shrink chip sizes, to produce more chips per wafer, better yields and a better cost per chip. "From a production and operational standpoint they're awesome," says Osha.
Who's Osha?
Two paragraphs later...
But the stock probably has more room to move up, especially if pricing stays stable or increases. "Over the next 12 months, supply will not expand quickly enough to keep up with demand," says Joseph Osha, an analyst at Merrill Lynch Global Securities, who also rates Micron a Buy.
Thank you.
The main risk in the stock, of course, is if supply increases enough quickly enough to weaken DRAM prices again.
Which is why when writing an article on MU, you definitely want to ignore their production plans. For example, a Japanese newspaper reporting their CEO to have projected 64Mb DRAM production to increase 67% until the end of the year. That's the kind of stuff you want to ignore.
More and more investors seem to be concluding that for Micron the lean years are history and the fat years are upon us again.
That is the perfect way to end that piece.
Good trading,
Tom
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