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Technology Stocks : Micron Only Forum -- Ignore unavailable to you. Want to Upgrade?

To: TREND1 who wrote (30683)	3/18/1998 2:11:00 PM
From: rob	Read Replies (5) \| Respond to of 53903

Micron is cycle, DRAM market is perfect for the trader, and MU is a good DRAM play... well maybe it used to be? In long termt the trend on MU will be DOWN.... DRAM biz is not about making the best product, or even making it for the lowest cost... its about how much money are you willing to loose. There is always the next guy who either has more balls or less brains then you... in the 80's it was Japan, the early 90's the Koreans... now the Taiwanese... who is next China, India, Russia? Aknowledging that DRAM's are a "suckers bet" the smart investor can reap the rewards. The price MU day to day is more a function of "market mood" more then anything fundemental. And sure MU can fall to $15 and then triple to $45 in the short run. But to making money on those trades one needs to know more market mood and have good luck ,then about MU earnings. You right my market history knowledge is less then my engineering ... though I do know about DRAM cycles... what I do predict about the PC market is that the market fundmentals are conspiring against DRAM's. DRAM supply and demand are not the only thing moving DRAM prices. Two big forces have been recently added: 1. Lower AUPs on boxes... if the AUP price of the box is getting smaller so is the ASP of parts going into the box. As in in 1995 when AUP's were $2000 the RAM in a box averaged $200. Now its half that. This has not happen before. AUP's used to remain constant Remember the first PC in 1980's there ran around the $2500 mark. You always payed the same for a PC, but got more power. Today you get more power "and" a lower price... cool! Now its different... the reason is that a "reasonable" amount of computing power can be bought for under $1000. Application needs have not kept up with semiconductor performance. This is new! This was not part of the traditional DRAM cycle. Think about how much DRAM do you need to surf the web... not much. What you want is a TI line not a faster CPU or more memory. This could change but my "gut" says no. 2. This is worse than the first. PC growth is starting to fall. Even at these lower prices market penatration is stagnating. The Asia thing is not helping... Joe Six-pack does not want a PC he wants a big screen with surround sound. Moving middle America to adopt a PC when it has trouble with its VCR is not going to be easy. Sure someday every house in China will have PC... but at what AUP... I bet its going to be closer to $10 then $1000. Anything that goes into PC's in the future will have RAZOR thin margins. The technology to make things like DRAMs is easily accesable to any "Joe with a billion or so dollars burning a hole in his pocket. Countries will pour money at this "entry" technology to gain access to a better standard of living for its people. The past cycle market of DRAMs I think is shifting to one of continued low margins. Where in the end there might be major fall out and only a few big companies making the stuff for little profit left Anyhow good luck reading the market making money on MU... I'd rather put my money on things that in the future GROW continously. I am not a good "market mind reader" so I stay out of that game. RP