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

To: Skeeter Bug who wrote (47750)	8/21/1999 1:04:00 PM
From: zsteve	Read Replies (3) \| Respond to of 53903

from Barron's, must be very bullish for MU next week? interactive.wsj.com ======================== .............. Michael Katz is an endangered species. More properly, of course, he should be called a member of an endangered species, but Michael is a professional short seller, and since we haven't taken a census of short sellers in the past 24 hours, it could be he's the only one left and thus, all by himself, constitutes a species. Michael runs Reynard Asset Management and has been doing his bear bit for over a decade, somehow surviving the greatest bull market in history, his humor and insight nicely intact. Swimming upstream against a roaring tide is interesting but not very rewarding or even particularly enjoyable. The foxy part of his nature implicit in the name of his company is evident in that he also runs a global hedge fund that goes long as well as short and has done quite well. We tracked Michael down in his lair last week in search of some ideas. That's a commodity, happily, Michael's always full up on. So we tapped him for two, one on each side of the market. His negative favorite of the moment is Micron Technology. His positive is Hitachi Ltd., the Japanese all-purpose company, which, as Michael dubs it, is IBM and GE rolled into one. Michael's down on Micron for all the right reasons: The stock has been very strong; it closed on Friday above 65; that compared with a year's high of 80 and a fraction, a year's low of 20 and a fraction. The company, meanwhile, has been mired in the red. Micron, by way of reminder, is a leading semiconductor maker, specializing in dynamic random access memory -- or DRAM -- chips. It has the distinction of being the only one of its kind left in this fair land of ours. DRAMs are a commodity item, and prices rise and fall sharply depending not only on the usual drivers of supply and demand but on how adept producers are at holding back invariably ample inventory from the market. Thus, DRAM quotes went from $9.50 in February to $4.25 as recently as July and then bounced up to their current $7.25, not the least of the reasons for the recent strength in Micron's stock. The shares, incidentally, have become a plaything of the day traders, not exactly a guaranty against an abrupt trip south. Michael, who was an early bull on Japan and consequently spends a good deal of time in the Far East, reports that the big DRAM makers in Japan, Korea and Taiwan are all busily increasing capacity, both by squeezing more yield out of current facilities and by outright expansion (apparently, they can't help themselves). Pure and simple, that translates into intensified competitive pressure and softer DRAM prices. Which is why he thinks those glowing estimates for Micron earnings next year are a pipe dream. In any case, he can't see endowing the stock with more than a modest multiple of peak profits ($3.95 in fiscal '95 ). His target for Micron: something below $25. .........