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Technology Stocks : Semi-Equips - Buy when BLOOD is running in the streets! -- Ignore unavailable to you. Want to Upgrade?

To: John Dally who wrote (3600)	11/28/1997 10:41:00 AM
From: Ian@SI	Respond to of 10921

... wasn't the historical drop in DRAM price ~30% per year? Yes, Price per megabit has dropped 30% annually on average. However, it would be a serious error to plan one's investments by relying solely on an average rather than looking at the range of data points. Note that we're not talking about price changes of specific chips but rather price per megabit. I believe that may be another factor that might be inappropriately influencing your decisions. It seems like just two weeks ago I looked at the Achilles site and saw 16 Mb DRAM at $3.90, last week it was $3.46, and now it's $3.10. What do you think is happening? The 16Mb part is being replaced by the 64Mb part. 16Mb parts will approach $1-$2 within 6 months to a year at most. They are rapidly becoming the "overripe bananas of the DRAM sector. While the nutritional value may be there, almost nobody wants them. Is demand softening in Q4? Only for the specific chip, not for memory. Demand has been increasing by about 80% annually measured in bits. Or, has additional production capacity come on line? Yes. ...and more will come on line. True, lower marginal costs can be achieved by investing in capital equipment, however, businesses also need to earn a return on their cap ex investments. As I've said, most chipmakers seem to be losing investments to me. I prefer buy and hold to an actively traded position. Traders can and probably do make bags of money from the alternating manic-depressive outlooks for the chipmakers. Doesn't a steeper than expected decline in price imply that many previously planned (& announced) projects are no longer cost effective? That's one option. Another is to change the cost side by buying equipment from the part of this sector that makes money much more consistently. Sticking with the old plan essentially means abandoning the business. Buying new equipment is an option that allows the company to come up with a new plan that looks profitable. Last, the Koreans manufacturers expanded production through debt. Today, they are being asked to pay the money back. It's hard to buy when you have no credit. Where's the money going to come from? I agree with Bob's view here. I have no incremental information to add. John, There's money to be made whether the prices go up or down. IMO,it would be foolish to expect the recent Equipment company price downtrend to continue until the stock price reaches zero. ;-) The trick is to determine at what point your risk from being short exceeds the risk from being long. While I disagree with the conclusions I think you've made, good luck with your positions. Ian.

To: John Dally who wrote (3600)	11/28/1997 10:50:00 AM
From: FJB	Read Replies (1) \| Respond to of 10921

John, RE:It seems like just two weeks ago I looked at the Achilles site and saw 16 Mb DRAM at $3.90, last week it was $3.46, and now it's $3.10. What do you think is happening? Is demand softening in Q4? Or, has additional production capacity come on line? I think there is a serious demand problem in Japan. That consumption tax they passed awhile back is probably the stupidest move I've ever heard of. NEWS STORY-Tokyo Electron downgraded by Solly on fears DRAM makers will cut back capital spending interactive.wsj.com I thought you would like that story. ;-) Bob