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To: Norrin Radd who wrote (3790)	8/13/1998 12:52:00 AM
From: DJBEINO	Respond to of 9582

NATIONSBANC MONTGOMERY*NATIONSBANC MONTGOMERYNATIONSBANC MONTGOMERY MICRON TECHNOLOGY, INC. RATING: BUY August 12, 1998 SEMICONDUCTORS NYSE: MU Jonathan Joseph, CFA (415) 627-2925 First Call Claude Hazan (415) 627-2845 DJIA: 8541 S&P 500: 1082 NMSGI: 115 PRICE: $33-3/4 FY ENDS 8/30 1997 1998E 1999E 52-WEEK RANGE: $60-20 FULLY DILUTED SHARES O/S: 212.3 MM Q1 (NOV) $0.10# $0.04 $0.20 MARKET CAPITALIZATION: $7,165 MM Q2 (FEB) 0.18## (0.23) 0.28 AVG. DAILY VOL. (3 MOS.): 3,988,331 Q3 (MAY) 0.44 (0.50) 0.34 SECULAR EPS GROWTH: 15% Q4 (AUG) 0.33 (0.25) 0.43 CY98E REVENUES: $3,152 MM FISCAL YEAR $1.05 $(0.92) $1.25 MARKET CAP./REVENUES: 227% P/E 32.1 NM 27.0 5/98 LT DEBT: $718 MM P/E/G 214% NM 180% 5/98 LTD/TOTAL CAP.: 21% PREVIOUS EST. $(1.17) $0.17 5/98 ROAE: -2% CALENDAR YEAR $1.00 $(0.78) $1.96 5/98 SHAREHOLDERS' EQ.: $2,774 MM P/E 33.8 NM 17.2 5/98 BOOK VALUE/SHARE: $13.07 P/E/G 225% NM 115% DIVIDEND/YIELD: $0.20/0.59% PREVIOUS EST. $(1.44) $0.73 # Not including one-time gain of $0.03. ## Not including one-time gain of $0.48 (MUEI shares) * NationsBanc Montgomery Securities LLC was manager or co-manager of a public offering and/or has performed investment banking or other services for this company in the last three years. Estimates Raised on Higher Prices Spot market prices for both 16Mbs and 64Mbs increase across all product lines, with about a 7% price increase in a mix of parts over the last three days alone. We see 64Mb prices, including EDO, PC-66, and PC-100 parts being routinely quoted above $10 and 16Mb parts above $2.00. As a result, for Micron's November quarter and all of next year we have raised our forecast from $1.80 to $2.30 on the 16Mbs and from $7.50 to $10.00 on the 64Mbs. We have also raised our fourth (August) quarter EPS estimate from a loss of $(0.50) to a loss of $(0.25) and fiscal 1999 EPS estimate from $0.17 to $1.25. We retain our $45 price target based on a calendar 1999 EPS estimate of about $2.00. This is the third price uptick the industry has seen in the past three years, and while the other two failed, we believe this increase will stick: demand at the margin has increased as the industry continues to consolidate capacity and new capital spending comes to a halt. This uptick seems to have legs. We believe the current uptick in spot market pricing has more sustainability than in the past two brief upturns. page 2 NationsBanc Montgomery Securities Marginal supply being taken off line. For one, Siemens, who is losing over $500 million this year, has shut down a major DRAM fab in England. Micron shut down TI's old Richardson facility, and a number of Japanese makers are taking capacity off line. Even NEC recently announced it would not increase DRAM output to the level previously forecast. In the longer-term the Japanese and Koreans, who represent two-thirds of all DRAM capacity, cannot get funding for expansion. Korean companies have ordered only $60 million in equipment from Applied Materials in the last three quarters. And that means the Koreans cannot even get funding for installing large amounts of new deep UV and CMP equipment, which we believe is critical for economically transitioning below 0.25 microns. This could mean an end to the aggressive shrink strategy the Koreans have been pursuing lately. As spot market DRAM prices rise, we do believe the Koreans will stop taking the production "holidays" they have pursued voluntarily since June. Even so, the lack of process progress and the shortage of new capacity will likely result in a shortage "bubble" that should run through the industry some time in the next six to 12 months. Demand at the margin stronger. Demand for all PC components (see Doug Lee's note from this morning on SMTC, MCRL, UTR and POWI) has been stronger than expected since mid-June as PC makers restock inventories and fill channels worked to excessively low levels. The demand trend is continuing into August, setting up what will probably be solid back-to-school and Christmas selling seasons. We do know there is some panic going on in the broker market as buyers become increasingly concerned about supply just at a time they have begun to institute just-in-time inventory control systems. Confusion in this case can only be good for component suppliers, in our opinion. DRAM ASP ASSUMPTION CHANGES 16Mb 16Mb 16Mb 64Mb 64Mb 64Mb (4q98) (FY98) (FY99)(4q98) (FY98) (FY99) Old $1.80 $3.15 $1.80 $7.50 $9.22 $ 7.50 New $2.00 $3.19 $2.30 $9.00 $10.29 $10.00 Micron Technology and its subsidiaries design, manufacture, and market DRAMs, fast SRAMs, personal computers and custom-manufactured board products. Micron Tech holds a 64% interest in Micron Electronics (NASDAQ: MUEI), a rapidly growing vendor of personal computer systems and assembled board products; MUEI represents about 47% of sales. 206.253.196.27

To: Norrin Radd who wrote (3790)	8/13/1998 12:56:00 AM
From: DJBEINO	Read Replies (1) \| Respond to of 9582

Prices For 64M DRAMs Likely To Bottom Out Soon TOKYO (Nikkei)-The precipitous fall in the price of 64-megabit DRAM chips will soon run its course, an increasing number of market observers say. While prices for June shipments fell compared to the previous month, production cuts by South Korean chipmakers and a steady increase in demand for personal computers in the U.S. have pushed the spot price upward. Negotiations covering July shipments will likely end with agreement on the same price as in June. The price for 64M EDO DRAM chips slid around 5% to 1,000-1,100 yen in June, with the price of 64M synchronous DRAMs declining by a similar percentage. PC-100 microprocessing-unit compatible synchronous DRAMs traded 100-200 yen higher than other synchronous DRAMs. In the U.S. and other overseas markets, the spot price of 64M DRAMs leveled off after June and has been moving up since late July because of the lower production by South Korean manufacturers. Major chipmakers have been pushing for a price hike on July shipments, but buyers are likely to win out and keep prices steady. Computer makers in the U.S. typically increase parts procurement in the autumn to prepare for higher sales around Christmas. But this seasonal effect may not be sufficient to offset the glut in DRAM supply in 1998 because some foreign chip makers may ease production cuts in response to higher chip prices, a number of experts have warned.