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To: Bharat H. Barai who wrote (25467)	12/15/1997 11:36:00 PM
From: Skeeter Bug	Respond to of 53903

>>No amount of bashing on SI can create or destroy such entities in few weeks or months.<< bharat, why am i surprised you have a tie to the memory industry ;-) it is common knowledge that 1998 is sealed already. you don't just shut down multi billion dollar fabs. your scenario may play out OVER TIME. like 8-18 months. these things hurt your case badly, imho. 1. mu is short cash. they spent over $5 to earn $1 and very small change on 16 mb chips (less than $1 after next q's eps are released). this, and not si bashers, will eventually destroy mu. 2. a full ramp to 64 mb production takes cash and billions of it. mu doesn't have it and will further trim their equipment budget as time goes forward. i find it interesting that you mentioned korean cutbacks and not mu cutbacks. A BIAS, MAYBE? ;-) 3. 64 mb overwhelmingly increases global supply by at least a factor of 3 and hurts pricing. remember, these billion dollar fabs MUST RUN (except knee high lehi ;-) 4. so, mu can't afford a full fledged 64 mb ramp. the koreans can. not to mention the japanese, taiwanese and chinese. oh, and ibm and txn. 5. everyone can make money on 64 mb chips while mu loses money on 16 mb chips. 6. 64 mb pricing puts A LID ON 16 MB PRICING. if the koreans make money on 64 mb chips - or even break even - mu is losing money on 16 mb chips. 16 mb chips HAS ALREADY BEEN AN OVERWHELMING DEFEAT FOR MU. SPENDING OVER $5 TO MAKE A BUCK IS DUMB AND BAD BUSINESS. throw all this to the wind and you will suffer for it. americans don't invest for 8-18 months of what might happen. cypress is missing, oracle is missing. lots of companies are missing estimates. this will only drive down mu. but, what the heck, this makes a market. you go long and i'll stay short. see ya in the teens ;-)

To: Bharat H. Barai who wrote (25467)	12/16/1997 8:28:00 AM
From: Earlie	Read Replies (1) \| Respond to of 53903

BHB: A well written response, and I appreciate your sharing of your source, which is no doubt very credible. I share your view that the Korean meltdown will have fundamental and very nasty consequences not only for the Korean people, but for North America as well. While many N. American investors prefer to ignore it, they do so at their peril, and I have commented on this frequently. There is an alternative view with respect to how this situation will play out. Korea has only one tool with which to fight its way back to the surface and that is "exports",.....exports of whatever they can produce and whatever they can sell to the rest of the world. This situation also holds true for several other bleeding S.E. Asian nations. As a result of currency devaluations, those exports are now even more competitive with corresponding N. American products, and even more important to Korea in terms of acquiring badly needed foreign currencies. It should also be remembered that the Korean manufacturers cut back on their shipments to N. America this past Spring/Summer, partially in response to the nth dumping charge, and partly to ensure on-hand inventories while they converted over to 64 Mbit production. That this was an error of judgement on both counts is now apparent, in that MU and the Taiwanese filled the void effortlessly, and the 64 Mbit chip still hasn't developed as a serious market, and is in massive over-supply in any event. Korea will fight ferociously to recoup lost market share in this arena. The scenario of rising memory prices is not easily accepted unless many many production plants around the world somehow disappear or cease activity. I have no doubt that some Korean production capacity will fall by the way side (indeed, Korea has already lost 6 of its top 30 conglomerates, and more will follow). Be that as it may, there are many fabs just coming on stream in several other jurisdictions, even as several have just moved into production this year, and each can be counted upon to improve production efficiencies as they settle in. The Taiwanese do not share the Korean debt problems, and they are rubbing their hands in anticipation. All of this relates only to the supply side and does not address the falling growth rates in the demand side of the equation. For many months, several bears, (this writer included) have been pointing out the deteriorating conditions within the semi industry, and have been warning of the inevitable consequences. Those conditions continue to worsen. I can't conceive of other than inconsequential and momentary improvement, until the industry completes the "sweat-down" cycle, which appears to me to be barely underway. Time will tell An additional comment if I might. With respect to your comments about Korean financial methodologies, your views are well founded. The level of graft is amazing, although that nation holds no monopoly in this regard. What is to me ominous is the degree to which Japan is the baseline banker to much of S.E. Asia's crumbling loans. Over the next few months, this will have implications for all of us, in measure well beyond our current concerns for Korea. Anyway, that is what makes markets, and your views are appreciated. We all benefit from the dialogue. I'll remain a bear with respect to MU and the industry in general for a while yet, until I see the supply-demand imbalance improving. Additionally, if history is any guide, the damage wrought to stock prices will be over-done to the down side even as they were to the upside. MU will see single digit stock prices before this Summer. Best, Earlie