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

To: Thomas G. Busillo who wrote (37154)	8/9/1998 8:44:00 PM
From: phbolton	Respond to of 53903

Now that MUEI has more revenues than the semi part of MU I thought it would be interesting to see what MU looks like without MUEI. Each share of MU includes about 0.3 shares of MUEI so deducting $4-5 puts MU alone at about $30. What does this get you in any standard sort of analysis? Sales are about $5/share so PSR is around six. (for a commodity company?) Year to year revenue growth rate is -40%, more or less. PE is way underwater. Current assets (1,050) - inventory (340) is a bit bigger than current liabilities (470) but a lot smaller than current liabilities plus debt (1,600). So MU's working capital, depending on definition, is in the range of 240 plus to 600 negative. 240 is about the consensus loss for the next couple of quarters. The fixed assets of plant, process etc, which includes Lehi, are listed at 3,000- which might be just a tad optimistic. Fixed costs are about 120, revenues about 270 (cost of goods 320), gross margin about -15%. Receivables are 280. The numbers are all in millions. This is not a good balance sheet. Two or three more quarters like this last one and Larry & Hal have to find a new stock to follow. At current revenues if gross margin rises to 50% they just barely break even. At 30% gross margins they still lose money. They have to grow revenues to survive. And that is probably why they did the TI deal which is a long shot but probably the only one they have. MU is getting 740 in the TI deal (basically a convertible loan and TI gets up to 20% of MU in the deal) which should get them about three more quarters at the current burn rate. Fearless predictions: look for (1) closing the TI facilities as fast as possible, (2) use the 740 from the TI deal to bring Boise to the next die shrink, (3) selling off of Lehi and some more of MUEI (4) for this strategy to fail as MU has already lost the 64 round and will not have the assets to play the 256 round.