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 (22933)	10/25/1997 4:12:00 AM
From: Skeeter Bug	Read Replies (1) \| Respond to of 53903

dave, >>1)MU dsp for last quarter was on average $6.50 (correct me if I am wrong<< they reported $7.00 in their release. when cornered in their cc they fessed up that their 16 mb biz was $6.50. i don't think they used a weighted average as they wanted to portray the best possible number. >>2)Micron's majority of sales is by contract<< contracts are typically 1-3 weeks. when prices collapse, the customer is able to renegotiate if they want to. why? the risk of telling the dram supplier to kiss off in a glut of massive proportions is enough to send chills down their spine. mu has little flexibility. it showed in last q's weak asp. >>3)MU sells excess on spot market, but I understand from reliable sources receives a premium on it product because of tight parameters on chips which makes it more desirable.<< not much, if any at all. why? let's reason this out. the hot selling pcs are the under $1k group. nothing is more important than cost cutting (look at gtw ;-) why pay a premium when it will impact your razor thin margin? gtw won't anymore ;-) this is a commodity business after all. >>4)Above (as I understand it makes up 80% of chips sales) is 80% so other 20 % is specialty and much higher prices.<< the 80% is the dog. the 20% is the tail. the tail doesn't wag the dog ;-) even if it is an 80/20 mix as you state (do you have a reference?), it didn't impact them big on the asp. i'll bet their cost is a lot more, too. margins may be higher, but not high enough to wag the dog. >>5) MUEI has significant impact on bottom line last q<< and gateway used to make money too. now they're losing $0.16. nuff said ;-) >>Given that achilles is lowest of any price of any memory chip I have ever seen published anywhere... how do I use their say $4.30 number in an equation to derive a new asp value.<< first off, your statement isn't true. i posted a link to a news article about mu that quoted $4.10 as the current spot price. achilles is 5% higher at $4.35. i saw another article that quoted $4.10 also. jerry denkura trades dram for a living. he mentioned mu refusing to give up market share and selling chips for less than $4.00. there, you have two sources that contradict your statement about achilles. >>That is what I would like to know in real time. Please note AICE web site isnt so bold as to quote a single price memory... but rather breaks in out into product numbers which usually has a 20 - 30 % variation.....and that does not include specialty chips.<< again, if you focus on the tail you won't get as clear a picture of what a dog is if you focus on the body. that specialty pricing was in effect last q, at higher levels to boot, and mu's asp came in at $6.50. barely any affect at all. >>Now I'll give you a clue to my dilemma.... over and above what I just described, 20% of Microns product line which is specialty chips could be much more expensive then the remaing 80% that is sold under contract and on spot......and therefore their margins are probably much higher.<< #1, where did those margins go last q when the specialty pricing was much higher. #2, who's buying specialty chips to put intot he fastest growing pc segment - sub $1k pcs? nobody. maybe gtw used to ;-) >>If you disagree with any of my assumptions thats alright b/c I may be mistaken....but that is what we need to work out.<< i think i stated the issues i have pretty well. you do have some valid concerns. however, achilles has been excellent two qs in a row. i'm going with it until it doesn't work anymore. the biggest concern is that mu is moving into sram quickly. however, sram pricing is collapsing as everone has the same idea that mu has had - except a lot sooner ;-) if and when mu starts spitting out 15 mil sram chips a month then nobody will be making a profit there, either. >>Oh, and as far as TK is concerned he will whatever number he can find at any given point in time.....if it suits his purpose.<< ahhhh, we agree on something. psssss... wait for his downgrade to come out in nov (possibly dec). >>Good Luck Trading,<< after gtw opened up today, thanks, i need it ;-) >>PS: I never got picked for criminal jury once the attorney's discovered my background :)<< my lawyer would love you ;-)

To: DavidG who wrote (22933)	10/25/1997 9:37:00 AM
From: Kerry Phineas	Read Replies (1) \| Respond to of 53903

DavidG, what is your background? You have some experience in semi's right? re your notes, Jerry Denkera(sp?) has a lot of knowledge of the specifics, but... 1. Maybe- its what they said at the conference call, but I think there was some question as to just how solid those numbers were. 2. I thought it was about 50/50; regardless it would seem that unless there was a significant difference between contract and spot chips there wouldn't be much difference in price, something MU has backed up in conference calls. Its my understanding that MU's chips have slight quality advantages, but is that enough? 3. Oh, you just mentioned my last point. How much of a premium does it get, I wonder? 4.,5. Sounds valid, but 20% isn't a lot of money; in terms of MUEI, they produce very high quality computers but its my understanding that they don't produce anywhere near are efficiently as a cpq or dell. Last quarter, it was my understanding that MUEI was break-even. HOWEVER, they bought out Netframe somewhere around July, and a lot of cpq's and dell's profits of late have stemmed from servers. Would be interesting to see just how much of an impact Netframe could have on MUEI(note Netframe made better servers than cpq but didn't have a distribution channel that made them a feasible company, and Micron bought them for a steal- basically for the amount Netframe spent on one year's research and development.This acquisition could be huge for MUEI, imo.) You also mentioned Appleton's firing being related to his desire to fund further fabs by issuing stock. That was probably a factor in Joel Parkinson leaving/getting fired; with Appleton it seems like it was just a silly power play b/t him and Tyler Lowry/certain members of the board, and that he had the audacity to sell some stock.