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To: TREND1 who wrote (22641)	10/22/1997 12:44:00 PM
From: davesd	Read Replies (1) \| Respond to of 53903

Larry, once again neither you nor I know if MU plays the commodity game. I remember that MU had 3 weeks of finished inventory on their docks at the end of the FEB quarter. Maybe others remember that too. Anyways....AICE update..nothing on DRAM... Today's Commentary: 10/22/97 Participants in the CPU spot market are still experiencing a high level of uncertainty. While the published price for both domestic and off-shore availabilities has remained stable, buyers are demanding lower costs. In fact, most sellers will verbally accept lower bids closer to the estimated new prices. dave

To: TREND1 who wrote (22641)	10/22/1997 3:09:00 PM
From: mike iles	Read Replies (4) \| Respond to of 53903

Larry, What you're saying about not holding finished goods but cleaning them out as soon as possible makes sense ... DRAM prices generally go down. But the boys in Boise don't fully appreciate this fact. Refer you to the Q3 confercall (June 16/97). Management indicated that finished goods inventory at the end of May was higher than normal but still less than 3 weeks. Fred Hickie guessed that this was close to 15 million units and they averred he was real close. Then Tom Kurlak, yes the TK, asked why they were holding that inventory and Baldwin responded by saying that they didn't like the spot prices ... and they were going to keep their ice cubes in the freezer. Baldwin also spent time on the call distinguishing between the spot and the contract market (a pretty meaningless exercise because contracts last just 1-4 weeks) and in the course of this dialectic said that the spot market has 'been soft for an inordinate amount of time' and that they expect it to rebound. A wee detachment from reality there ... maybe his gray matter absorbed some of that softness. In answer to your question, yes they do guess on price, yes they do think it goes up once in a while and yes they've been dead wrong recently. I think what you're not taking into account in looking at their behaviour is that while it would be rational to ship them ice cubes before they melt, MU's management is lumbered with an irrational stock valuation and so they're behaving irrationally in order to support it. In the last 4 quarters the dollar value of MU's memory inventory has gone from $187 million to $339 million, up 81%. Sales in the same period have increased by 41%. reagrds, Mike