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Strategies & Market Trends : Zeev's Turnips - No Politics -- Ignore unavailable to you. Want to Upgrade?

To: All Mtn Ski who wrote (2378)	10/31/2001 5:38:01 PM
From: Steve Lee	Read Replies (2) \| Respond to of 99280

The price trend of DRAM does not match Micron's comment "that orders have been stronger over the August quarter so far to date" If we assume no further decline in prices from now until the end of MU's current Q (11/30) then revs/Mb have dropped by 35 - 40%. Allowing for increase in bit shipment of 20%, then MU is looking at a sequential rev decline of 22 - 28%. I think it will be a greater decline than that due to last Q's revs including sales of product written down in the previous Q (there was no such write down in the last Q) but I will give them the benefit of the doubt for the sake of argument. The above generous assumptions give MU an annualised sales run rate of $1574 MM. At a market cap of 13.6 BB, that gives them a P/S in excess of 8.5. Now consider that DRAM sales in 2003 are only expected to equal the sales level in 2000, and that capacity now is greater than capacity in 2000. Even if Hynix exits the DRAM market (not an accurate prediction cos someone is likely to at least partly buy their capacity), things don't look good for MU. Samsung is doing better financially and this week announced they are doubling capacity for DRAM production. As Samsung are the biggest manufacturer, their doubling of capacity more than makes up for the next biggest player exiting completely. I started buying MU puts recently, bought more today, and expect to buy more over the next week.