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

To: SlowThinker who wrote (41758)	12/28/1998 1:23:00 PM
From: Steve Robinett	Respond to of 53903

Thinker, You're post was among the better ones I've seen on this thread in quite a while. My only complaint is that you didn't follow through on your original theme, i.e., valuation. You set up a discounted earnings valuation model (discounted cash flow is actually better), gave a hypothetical example but failed to apply it to Micron. Best, --Steve BTW, where to you get the 20% discount in your example.

To: SlowThinker who wrote (41758)	12/28/1998 2:47:00 PM
From: Zeev Hed	Respond to of 53903

SlowThinker, I like your analysis, but I think it is flawed in one place, it is not the discounted flow of future earnings that count, it is the discounted cash flow. Over the next five years, if MU wants to stay competitive, it will have to throw in some $2 Billions of capital expenditures or so. They may be profitable, but the cash flow might not be there. Furthermore, you must see within the next five years at least two years of earnings in excess of $10 share to justify the current price (even if you count just discounted earnings) and with the Korean revitalizing their business, I am afraid that pricing pressure are here to stay for some time. A better bet is RMBS which is projected to capture more then 20% of all DRAM in three years, they do not care about the dram makers earning, they get a cut (about 1.7% or so) on sales, which, as you pointed correctly are going to boom. Zeev

To: SlowThinker who wrote (41758)	12/28/1998 7:57:00 PM
From: Kerry Phineas	Respond to of 53903

Slow Thinker, thats a very long letter for a new member. Methinks MU is ahead of itself for the near term; prospects of future profitability are probably in the stock. The rise based on recent strength in DRAM may prove to be early if there has been channel stuffing in the PC sector as some suspect. A fall in DRAM would ruin the overly rosy scenario of earnings for the rest of the year, which would in turn call into question earnings prospects for 99 etc. This has basically been another short squeeze, not a rise based on fundamentals. There should still be a significant risk premium in the stock, and one should be wary of listening to the biased opinions of the analysts who tout the stock the loudest. Would write more, but no time.