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To: TREND1 who wrote (29212)	3/3/1998 8:37:00 AM
From: mike iles	Respond to of 53903

Larry, < all other DRAM producers have been selling below cost and many are liquidating large inventories driving down global prices precipitously> There's a lot of irony to be mined from this statement. MU is selling below cost and most observers would agree that its dramatic expansion of production was a key factor in driving down prices last year. Remember the Koreans tried to stabilize prices a year ago by cutting back on production. Guess who took advantage of that to increase their market share? The only thing MU hasn't done is liquidate inventories ... in fact over the last 9 quarters they've increased chip inventories from $137M to $351M. During the same period chip sales have declined from $869M per quarter to $440M. Hmmm ... maybe their strategy is to help stabilize the market by stockpiling chips. To say MU has been profitable in recent quarters and is the 'low-cost producer' ignores this large stack of chips they've been piling up. On the last confercall they said it was valued at cost which means that if they liquidated it, 'driving global prices down precipitously', they would undoubtedly show a big loss. They can only go on warehousing chips for so long ... the longer they do, the bigger the eventual loss. regards, Mike