Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

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

To: DavidG who wrote (22916)	10/25/1997 12:28:00 AM
From: Skeeter Bug	Read Replies (2) \| Respond to of 53903

>>Also why is this simplistic approach so much better than the way analysts arrive at their numbers. Something is wrong if you really believe Spot and contract sales across many different memory products by MU can be reduced to Achilles quotes. You know... my feeling all the while is that you are not interested in answering anyones concerns...but just getting into a pi$$ing contest. I have seriously asked this question many times for my own edification and never got a satisfactory answer. << dave, valid question. i've answered this question before in many different ways. let me summarize: 1. it has been an excellent predicter the last two qs. does that mean it will be a good predicter this q? not necessarily. does that mean it will be bad this q? not necessarily. an inference can be drawn that whatever achilles tracks is right in line with what mu sells, though. you do need a slack factor of about +-5%, imho, and imho only. 2. when tom kurlack issued his downgrade and mentioned micron's dram pricing, he quoted the achilles number to a "t." so at that point in time, tk's number jived EXACTLY with achilles. the probability of having completely different numbers all q and then having the same numbers at report time has got to be very low. this isn't a guarantee that the same is true going forward, though. but, the inference is clear. 3. jerry denkura, our local dram trader, has always been with +-5% of achilles anytime he has quoted dram pricing for mu. he knows because it is his job. 4. the press has recently reported dram for mu being very close to the number that achilles posts. add it all up and i know where i'm going to bet my money... btw, there is lots of different dram with different prices. although i don't know for sure, i'd bet their is one standard chip that is probably the vast majority of sales and that is what achilles tracks and mu sells. the other stuff appears to be specialty chips, hence, the higher price tag. perhaps jerry could weigh in here. another caveat brought up by peter. mu is going more and more to sram - this isn't followed by achilles and will have some affect on mu's asp and profits. however, i know that the sram market is also collapsing under the weight of increased supply and 15 million more ics a month from mu is only going to make the situation much worse. sram is priced very closely to dram. since the sram ramp is new, mu is less efficient at it. mu also has warned of testing problems and inserted a caveat in their 10q. this may not convince you. however, you WILL NEVER get absolute proof of anything. if you had to prove that you had a job before going to work then you'd never go to work in the morning. achilles isn't 100% foolproof. but when you sum it with all the other data, you will realize that it is a very good indicator of current dram pricing. btw, I'D LOVE to have you on my jury if i was accused of a crime. :-)

To: DavidG who wrote (22916)	10/25/1997 3:16:00 AM
From: Kathleen capps	Respond to of 53903

David, I'm not trying to be arguementative but: >>Also why is this simplistic approach so much better than the way analysts arrive at their numbers. Something is wrong if you really believe Spot and contract sales across many different memory products by MU can be reduced to Achilles quotes. Why do you believe that "analysts" are some kind of rocket scientists and that they use complex methods to make projections? Maybe a few years ago, you found an analyst that used a rigourous scientific method to evaluate stocks. Today however, many of the analysts (at the large firms anyway) are glorified salespeople whose purpose is to move stock and generate commissions or to push stocks that their firm has underwritten offerings for. They are not the disinterested third parties you seem to think that an "analyst" is. And I very much doubt that they spend as much time studying the company as they do smoozing customers and clients. Just my two cents worth. For the record, I spent a lot of time earlier this year looking at MU's "cash flow's" and real earnings. For a company that is reporting earnings every quarter, they sure seem to be hurting cash flow wise. They even needed to borrow money for "working capital". I agree with SB's message regarding MU's manufacturing capability. I think in this regard they are supurb. I suppose as money managers, they have been superb also, as I never would have expected they could have juggled so many balls in the air for so long without them all coming crashing down in flames. As for the future, well, I think MU's been playing for time and I don't see the fundmental situation improving the way they have pinned their hopes on it improving. We shall see how they deal with even more decline in prices and greater competition. I also agree strongly with prior thread statements about how MU releases information favorable to their situation and stonewalls on the rest -- I wouldn't characterize them as having the most open style of management in the world. Perhaps that is why they have been successful in their juggling for so long -g-. Kathleen

To: DavidG who wrote (22916)	10/25/1997 5:37:00 AM
From: ratan lal	Read Replies (1) \| Respond to of 53903

DavidG Remember the Hatfields and the McCoys. They never stopped. Ratan

To: DavidG who wrote (22916)	10/25/1997 6:41:00 PM
From: Trey McAtee	Read Replies (1) \| Respond to of 53903

david-- here is it simply...MU has said that contract (thus, their ASP) pricing follows spot closely. this is normal in an oversupply situation. companies order dram on a smaller, more incremental basis since they may not need the parts immediately, and they can reduce their average COGS. now, as for spot indicators we have the AICE, which i like, allthough its usually lags spot by a week or more or achilles which i have come to depend on more. i think achilles is in reality not too far behind spot, and may in fact be exact. so, if contract prices are following spot, then with semi accurate spot prices, you can extrapolate ASP based on what the company says about the growth they are expecting in the next q (the funny thing is they stick to those targets pretty closely) as well as cost reductions. so, say they made 30 million units last q, and they are expoecting 10% more this q. that gives you the number you need to account for, 33 million devices. now all you need are the prices, which you can get from a variety of sources. using this you can build a pretty accurate model of MUs ASP. there isnt a complex formula, and in all honesty i expected them to play soem tricks with the accounting. i was honestly thinking that it might be as high as $0.38 or as low as $0.28. i split the difference. you have consistently mocked our watching achilles, and predicting EPS based on that. my statement was meant not as a pissing contest, but simply to point out what we were able to do with the meager tools at our disposal. in point of fact, i do not recall you ever asking that question directly. you have instead thought us stupid that we would reduce something so complex to something simple. the key is that it isnt that complex. the fact remains...if TK had used achilles he would have been more accurate. is this exact? no. i was lucky. there were a million things they could have done to beat me. however, i was pretty sure (99%) that they would still be within the range i thought was logical at the time. the great thing was that the upper end of the range was still below the analyst estimates. did you ever stop to think that maybe you should be asking the analysts what they are using to be SO wrong? i mean, these people are paid millions for being inaccurate. instead of taking the bears to task on this, maybe you should ask the 'professionals' what they are doing. good luck to all, trey