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To: Tim McCormick who wrote (26902)	1/21/1998 10:40:00 AM
From: yousef hashmi	Read Replies (4) \| Respond to of 53903

THANKS for the info.,kurlack may just change his mind about the industry. HE HAD DONE IT BEFORE.

To: Tim McCormick who wrote (26902)	1/21/1998 1:01:00 PM
From: Earlie	Read Replies (9) \| Respond to of 53903

Tim: Well now we have an interesting situation....TK and Merrill think MU will tank, while Goldman and others think it will fly. Fidelity votes with its feet., taking a virtually complete exit from a 12% (OF TOTAL ISSUED) position. So it looks like even the experts are divided. For the trend followers, and day traders, it doesn't matter, as they love the volatility, but funds hate it and claim to be influenced by fundamentals. They're also the big buyers, so perhaps the fundamentals are important to the stock price direction. Supposing that they might, it might be fun to work the problem backwards a bit to see what it divines. MU made $.04 this quarter, and the analysts think minus $.13 or so for Q2., the current quarter. With current ASP's around $3.00, and using an estimated $4.50 (a bit generous, and David might disagree, but lets be nice) as an average net cost, if the company ships even the same number of units as last quarter (100 million), they will drop $150.0 million on memory. MUEI can't be expected to add much profit this quarter (margins under pressure across the industry), and amorization must rise, so the loss per share could be somewhat more than the analysts expect (mild understatement). Even the most bullish analysts out there are expecting conditions to remain "rough" for the rest of this year, the inventories must be written down, the interest payments can be deferred, but must still be booked, so lets just say that on a best case basis, the company will take an enormous "restructuring charge" some time before the year ends and endeavour to put the bad news behind it. Mind you, the loss posted will be a rather big number, which could be a bit un-nerving to some of those funds out there, but what the heck, the future is before us. Fast forward to the fall of calendar 1998 (MU's year end is August 31). and the beginning of the new year. Probable Conditions - Would anybody argue that a cross-over to 64 Mbit would not have arrived? - How many chip producers will still be in the game? Pretty much those that are there now? If not, can we suggest those that will drop out? - Will PC's, which take most of the semi products, be in actual sales growth decline? (see recent interview of International Dataquest research personnel in Electronic News for their thoughts on the matter, and they are always optimistic). - Will all those Asian buyers who were expected to replace satiated N American PC consumers have solved all their currency and trashed stock market problems by then and restored a shattered negative "wealth effect" to the extent that they become interested in PC purchases and not just in feeding their families? - Will all those Korean, Japanese and Taiwanese producers have closed all or most of their plants (or any of them.....what they announce and what they do rarely coincide), or will they be producing and exporting at max rate to try to rebuild? - Will all the capacity still coming on stream disappear? What amount of money must MU make in that follow-on year and within what is likely to be at least as nasty an environment as the current one, to justify the current price? Seeing as it is a commodity product, can/should we grant the company a PE greater than 20? Using that generous number, it suggests that the company must make $1.50 per share. But of course, unit requirements in the field will not have risen substantially (can anybody argue that a PC will require more than 64Mbit of memory given the absence of new application software?) and in fact, may well have fallen (64 divided by 16....etc). Does this suggest a fast rising ASP? Can MU produce 64Mbit efficiently and competitively without a very large new capital expenditure? Will this occur soon enough to ensure competitive costs to match those that are or already have done so? Whence cometh the cash to so do?.....More debt? No matter how I cut the Mu numbers that emanate from this discouraging situation, in the absence of a flight of absurdity, losses result. It takes a bullish mind indeed or a totally uninformed (with respect to the current state of the PC/semi world) perspective to conjure up a positive and profitable scenario from the above, especially for a company that has not been cashflow positive for some time. Granted the day traders may well make money off the volatility, but the funds will inevitably drive the stock price down as the full realization of this situation becomes self evident through continuing and large losses. Most funds have a short term view of the world, and have difficulty in peering across deep misty valleys. Apologies to Larry for length of post and use of "words", (although I suspect we come out even, given my less frequent posting). I'd be delighted to review any counter post that looks at the one-year-out.scenario and provides some numbers and reasonable assumptions. I suspect that the degree of optimism that would become evident in any such prognostication would prove embarrassing once committed to paper. Let's see who responds to the challenge Best, Earlie