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To: xstuckey who wrote (47757)	8/23/1999 1:44:00 AM
From: Thomas G. Busillo	Read Replies (1) \| Respond to of 53903

xstuckey, that's what I couldn't figure out or explain. If we can pick up the pattern, then why wouldn't "the market"? And wouldn't any "edge" evaporate? Or is it like a great metaphor Cramer once used a while back - is it like the scene in "Rebel Without a Cause" where the game is to be the last one to jump out of the car before it goes off the cliff? (and to extend Cramer's metaphor - maybe that's what analysts at some firms are for - to make you think you have a lot more road to go when in fact you're already riding on air? <g>) Or even forgetting the interesting thing about the date and trying to explain it in terms of what's happening out in the real world, if part of the early August peak is caused by back-to-school demand pushing up prices, and since MU does trade like a quasi-DRAM derivative, and it's reasonable to expect somewhat of a stall in pricing momentum until the same thing happens for the pre-Christmas build, where's the "edge"? Is it that there are a larger % of market participants viewing it less as an equity and more as a proxy derivative so that the overall seasonality is more pronounced now? But if the "proxy derivative effect" is for the most part true, is it truer now in the 1996, 1997, 1998, 1999 period than it was when they weren't on everyone's radar screen? Avg. daily volume by calendar year: 1999: to date 5,168,223 1998: 4,492,459 1997: 4,990,472 1996: 5,663,746 1995: 4,212,008 1994: 1,515,960 1993: 617,909 1992: 267,370 1991: 355,423 1990: 291,717 I'd say that a legitimate shortage would trump seasonality. Are we at that point now? I don't know. The mainstream financial press certainly thinks so. Prices have moved up. But I think there's validity in the points raised by Michael Katz in this week's Abelson. Samsung and MU - not shy about raising prodcution. LG/Hyundai - consolidation doesn't hit the 64Mb. As for the Japanese players who have made statements about their commitment to the product, my big question is - when is this happening? IF NEC has 11% share and Hitachi has 7% and the goal of their combined DRAM venutre is 20% global share, where's the reduction in commitment? Toshiba too. By 2001 they want DRAM to be under 50% of their overall memory line (v. an estimated 65% at present), but there was an article in one of the Asian papers that had their estimated production in Sept. 99 (1) 12 mil. unit/month Yokkaichi plant, (2) Dominion Semiconductor 4 million DRAMs a month and 3 million a month coming from their Winbond arrangement. So 19 mil. a month. Probably well under half of what MU is doing. But then, March 2000 DRAM estimated production is 1) Yokkaichi 13 million, (2) Dominion 5 million, and 3) Winbond 5 million. So in a 6-month period, even though they're reducing they're committment, that's still a 21.05% increase. Maybe that's below historical norms for them (?), but it still isn't the kind of wholesale abandonment of the market some of the analysts on the lunatic fringe seem to be implying is happening. And the article also states: "After that, Toshiba will increase DRAM output to secure a global share of 10 percent." So despite the Japanese abandoning the DRAM market lock stock and barell, right there you have NEC/Hitachi and Toshiba stating that they want 30% of the market. Say Samsung, Micron and LG/Hyundai combined are targeting 60%. Where does that leave Infineon? The Taiwainese? The Japanese guys who really have packed it in, but are still producing - Matshushita/Mitsubishi, Fujitsu (which I think has some kind of tie w/ Toshiba). Is this the much-awaitied "shortage" caused by the industry shake-out or is it just somewhat typical seasonality? I don't know. If it was 2000, I'd have an easier time saying this is the shortage everyone's been waiting for. Good trading, Tom