Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

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

To: TREND1 who wrote (30892)	3/20/1998 9:20:00 AM
From: DJBEINO	Read Replies (4) \| Respond to of 53903

Headline: Micron Technology: News From Micron Analyst Meeting. NEWS FROM MU ANALYST MEETING YESTERDAY 3/18 CLARIFICATION ON FEB. FY2Q98 RESULTS. EXPENSE REDUCTIONS SHOULD STABILIZE FUTURE OPERATING RESULTS. WHEN WILL DRAM PRICING TURN? UNCERTAIN, BUT SUPPLY-DEMAND GAP SHOULD TURN FAVORABLE FOR CHIP MAKERS WITHIN THE YEAR. MU IS WELL POSITIONED FOR THE 64Mb PRODUCT TRANSITION. KOREAN DUMPING ISSUE SHOULD BE RESOLVED IN THE NEXT 120 DAYS. ----------------------------------------------------------------------------- KEY NEWS: MU CLARIFIED FEB. FY2Q98 RESULTS. Bit shipments declined 5% and memory pricing declined 26%(16Mb at $3.15). The disparity between bit shipments and production reflects two factors: 1) Testing problems were resolved late in the quarter. 2) MU held back parts due to market softness. Inventory rose slightly and is still low at approx. 3 weeks supply. Memory sales of 16Mb were 78% of sales, but wafer starts are now 35% 64Mb and should be 50% 64 Mbwithin a month. The unfavorable margins were due to the 64Mb transition and some unannounced one-time inventory write-downs. EXPENSE REDUCTIONS SHOULD HELP STABLIZE RESULTS. MU indicates that FY3Q-4Q SG&A will fall back to about $110 mil., down 19% from last quarter. R&D should be down slightly. MU has spent $750 mil. on the new Lehigh facility and will spend another $250 mil. to complete the test module for the plant. Total cap-x should be about $300 mil. per quarter for FY3Q and FY4Q. Continued MU Page 2 THE FUTURE OF DRAM PRICING? Don't know Current conditions remain tough with 16Mb DRAMs selling for under $3 in the spot market. However, a survey by MU shows their customers anticipate 105% bit demand growth during 1998. MU's survey has some credibility because of their good account penetration. Dell (16% of sales) is MU's biggest customer, and MU claims to supply 45% of Dell's demand. Overall, MU claims 10%-11% market share vs. 16% for Samsung (the largest), 13% for NEC (#2), and roughly equal to Hitachi. MU IS WELL POSITIONED FOR UPCOMING PRODUCT TRANSITIONS. MU is making a major push to 64Mb DRAMs. Additionally, all of MU's parts meet PC 100 specs (the upcoming high speed bus standard). With respect to future technology, MU believes the market will become more segmented with SLDRAM (SyncLink), RDRAM (Rambus) and DDR DRAM (double-data-rate) all serving niches. All three technologies can deliver 1600 MB/second data rates. MU sees RDRAM and SLDRAM combined, at only 10% of the market by late 1999. DRAM SUPPLY GROWTH IS LIMITED. Today, expect MU to indicate that world-wide DRAM bit supply will grow 40%-50%. Combined with yesterday's statement that MU's customers expect annual growth in excess of 100%, this suggests a shortage by year end. NEC today announced that their own supply would grow about 50% (see below). NEC Monthly Output Units Now Bits Now Units 1998 Bits 1998 16Mb 11 mil. 176 tril. 8 mil. 128 tril. 64Mb 5 mil. 320 tril. 10 mil. 649 tril. RECENTLY, HYUNDAI AND LG SEMICONDUCTOR WERE FOUND GUILTY OF DUMPING MARGINS OF 12.5% AND 7.5% RESPECTIVELY. Historically, these dumping margins would be applied in the future as a refundable bond, but MU continues to push for dumping margins to apply retroactively as a penalty and in the future as a tax. This issue should be resolved in the next 120 days. WE REMAIN CAUTIOUS ON SHORT-TERM TRENDS DUE TO THE VERY POOR NEAR-TERM EARNINGS OUTLOOK. However, we believe a more favorable turn in DRAM pricing will occur within the year, and we continue to watch closely for events signaling this turn. BUSINESS DESCRIPTION: Manufacturer of memory (DRAM, SRAM, Flash) products, personal computer systems and custom complex printed circuit board, memory module and system level assemblies. Owns 64% of Micron Electronics (MUEI).