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To: Sun Tzu who wrote (39293)	9/28/1998 8:51:00 PM
From: wily	Respond to of 53903

Sun: Hey! Where'd the party go?

To: Sun Tzu who wrote (39293)	9/28/1998 8:55:00 PM
From: Carl R.	Read Replies (1) \| Respond to of 53903

I agree, and after the bloodbath in memory the last several years, it will be awhile before another country sees DRAM as their future salvation. Probably about 6 years, based on past experience. <G> I haven't analyzed the report in detail, but it strikes me that most DRAM producers were blaming substantially higher losses on DRAM than MU entire annual loss. So MU probably is the low cost producer. Let's see, gross margins were -10% in the quarter. There have been posts on this thread calling for a doubling of yields by the end of the year by making the transition to .21 micron, though MU may have already done this according to their comments. The -10% margin implies to me that marginal costs were maybe $9 average for the quarter if the ASP was $8 for the quarter. Since costs tend to fall on an ongoing basis unless you stop and start production as some producers are currently doing, this further implies to me that MU's marginal cost is probably already below $8, perhaps substantially below. Thus I believe MU currently has a positive gross margin. This is consistent with there behavior, continuing to ramp up production. If costs fall to say $5-6 by year end, they could be very, very profitable this quarter if DRAM prices remain even remotely stable. Thoughts anyone? Carl

To: Sun Tzu who wrote (39293)	9/29/1998 10:59:00 AM
From: Knighty Tin	Read Replies (2) \| Respond to of 53903

Sunny, Are you factoring in the losses from the TXN operations, and the capital expenditures needed to reduce those losses to MU average? Agreed, bankruptcy may not happen tomorrow. But there will be no turn in DRAM as long as everyone, including MU, keeps adding capacity. And a company that runs losses and doesn't throw off any free cash flow in up markets hardly deserves to be priced 30 points above fair value. Seeing returns to the peak, and pricing them plus some into the stock, when the parachute has simply hit an air pocket can also be disastrous. MB MB