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To: Zeev Hed who wrote (34911)	6/14/1998 11:50:00 PM
From: DJBEINO	Respond to of 53903

LG Semicon sale of stake to Intel "almost concluded:" Yonhap SEOUL (AFX-ASIA) - LG Semicon Ltd is close to a deal in selling a stake to Intel, the Yonhap News Agency reported, quoting a Commerce, Industry and Energy ministry official. The official said LG has "almost concluded" a deal to attract foreign money and is likely to be excluded from "big deal" business exchanges among top chaebol. Under a "big deal" scenario, LG Group was to have given up its semiconductor unit in exchange for a chemical unit from another chaebol

To: Zeev Hed who wrote (34911)	6/15/1998 12:54:00 AM
From: mike iles	Read Replies (2) \| Respond to of 53903

Zeev, You make a valid point ... MU has put up a pretty good return on capital over the years although the numbers aren't quite as good as you suggest. And,in fact, if you make some adjustments Intel's results are better. To the numbers arggghhhhh!! First off, MU doesn't have $2.9 billion of retained earnings as you say. That number is the total of common stock/additional capital plus retained earnings. Those 2 numbers are (per Feb/98 balance sheet) $535 million and $2,340 million ... i.e. retained earnings are actually $2.3 billion ...still a respectable number I agree. Intel's comparable numbers are $5.0 billion and $16.5 billion (per the March/98 balance sheet). Now the adjustments: 1) dividends ... you gotta add these back in because they're a return to shareholders, the folks who put up the capital. MU's dividends in the last 10 years are $78 million (as much historical info as I could get ... doubt if they paid out much in the first 10 years). Intel's for the last 6 years are $641 million (as far back as I could readily go ... again, the earlier numbers are not that large). So add these numbers back to retained earnings ... doesn't make a heck of a lot of difference. Now the kicker ... how much cash do these 2 companies have? After all, once you pay off any debts the net amount belongs to the shareholders and could be paid out to them. So it should be counted. Well Intel has $8.3 billion in cash (net of all debt and puts) and MU doesn't have any ... in fact they're $223 million in the hole (net of debt and excluding MUEI's cash). After these adjustments the retained earnings-to-capital ratios are Intel ... 5.1X .. and MU... 4.1X. But you're right it's taken Intel twice as long. What you didn't address is the outlook for retained earnings. MU's is kinda cloudy ... first there's operating losses in the immediate future and that's going to put a dent in the $2.3 billion number. Then there's the qualitative issue of writeoffs ... Skeeter's 78 tons of DRAM which they're carrying at cost (the current market is lower) and Lehi, which they haven't started depreciating yet (they mothballed it what, 2 1/3 years ago?). At a rough guess these 2 items amount to at least $300 million of writeoffs. Chip in operating losses and MU's real retained earnings are likely south of $2.0 billion. Could it be that if Intel had stayed the course in memories they could have had 80% of the market like they they have in CPU? Zeev, I guess you're serious but the fact that getting out of memory and into CPU was a good thing for Intel shareholders is hardly debatable. MU's market cap is $4.5 billion (and about to shrink DRAMatically). They have say 10% of the memory market ... so the whole market's worth $45 billion. Let's say Intel could get 80% of it (don't ask me how because it's a commodity market with low barriers to entry as the Koreans and now the Taiwanese have proved in the last 10 years or so). That would be worth $36 billion. Intel's current market cap is $116 billion .... ipso facto, abracadabra, etc.... I rest my case... whew!!! regards, Mike