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

To: DJBEINO who wrote (35809)	6/27/1998 2:19:00 PM
From: John Graybill	Read Replies (1) \| Respond to of 53903

They put up the wrong links to those pages, but they're worth reading. I went to techweb.com and did a search on "micron technology" and found them. What a difference a week makes. Now EE Times is wringing its hands for MU over the deal, worrying about how Wall Street will accept vague estimates of "future profitability".

To: DJBEINO who wrote (35809)	6/27/1998 2:57:00 PM
From: DJBEINO	Read Replies (1) \| Respond to of 53903

Appleton on TI: What a deal By Jack Robertson A week after his company committed to spending $800 million for Texas Instruments Inc.'s fal- tering DRAM operations, Micron Technology Inc. chairman Steve Appleton defended the deal as one he simply couldn't refuse. In an interview last week, Appleton said the acquisition will improve Micron's position as the lowest-cost DRAM producer in the industry, "allowing us to be the most competitive global supplier. "We can spread our R&D, capital investment, and overhead costs over a much larger number of wafer starts, cutting our cost per chip dramatically," he said. In turn, that should make sales profitable even at today's rock-bottom prices, he stressed. The acquisition, which will get a desperate TI out of the DRAM business, will also turn Micron into what Appleton claimed would be the world's largest DRAM producer by surpassing the current leader, South Korea's Samsung Electronics Co. Ltd. Using first-quarter figures, a period in which Micron increased its market share and Samsung lost share, the Micron executive added TI's 7% to Micron's 10.5% to surge past Samsung's 14% market share. But Appleton said he wasn't as interested in jumping past Samsung as he was in gaining the cost advantage that extra TI output will bring. Micron will pick up 25,000 wafer starts a month at TI's former Avezzano, Italy, operation; 25,000 wafer starts a month from TI's joint-venture fab with Kobe Steel in Japan; and 20,000 a month from the joint-venture fab with Hewlett-Packard and Canon in Singapore. The former Twinstar DRAM fab in Richardson, Texas, that TI once operated jointly with Hitachi is being shut down. Another key aspect of the deal is the $750 million in low-interest financing that TI agreed to provide Micron. The financing-in the form of 6.5% convertible and subordinated notes-will be available in cash upon closing of the DRAM deal, which is expected in September. The capital can be used for Micron's Boise, Idaho, fabs, as well as for the TI facilities being acquired. "It absolutely gives us the lowest cost of capital of anyone in the industry, increasing our competitive edge," Appleton said, adding that the terms were extremely favorable compared with the 20% or more interest Korean DRAM competitors are now paying on their new financing. The Micron executive asserted the TI financing enables his company to upgrade fabs to remain at the leading edge of technology at the lowest possible cost of capital. It also preserves $700 million in cash that Micron already has on hand that it doesn't need to tap immediately. Micron also picks up an estimated additional $150 million in working capital that TI has on its books for the DRAM operation being sold. Once it acquires the TI DRAM facilities, Micron will immediately start converting the fabs to deep-ultraviolet processes to accelerate die shrinks and increase yields. The TI fabs, which are mostly at 0.35- and 0.30-micron feature-size processing now, will leapfrog to 0.21 micron-the same feature size that Micron is implementing now at its Boise fabs, Appleton said. The die shrinks will sharply increase the number of DRAM chips produced at the TI fabs. The larger economies of scale resulting from the TI DRAM purchase could play a major role in helping restore profitability to Micron. Earlier this month, the company reported a $106 million loss in its third fiscal quarter, blaming cascading DRAM prices. Appleton refrained from predicting when Micron's business would turn profitable again, but he did say that if DRAM prices "remain the same as today, we can easily be profitable in the near future." Copyright r 1998 CMP Media Inc.