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

To: PAinvestor who wrote (42161)	1/11/1999 11:34:00 PM
From: Thomas G. Busillo	Read Replies (1) \| Respond to of 53903

PA, I guess in theory MU could take $X amount of that $500 million and dedicate it to something other than RDRAM development as long as they meet the requirements as specified in the agreement. Aside from production milestones, they also have some requirements re: "Qualified Expenditures". Although INTC did its best to gear them towards RDRAM manufacturing capacity, there is some interesting use of the word "or" that gives some room for .18 micron expenditures on "other devices". If MU was ingeniously stringing INTC/RMBS along all along and appearing unwilling to dedicate firm resources to that architecture or if INTC misread the situation, good for them for getting Intel to invest $500 million in MU to do what they could have done their own at exactly when INTC wanted it. I don't think that's the case. While you can make the argument that lower PC component costs are good for INTC, I interpret the investment as more strategically geared towards getting a "laggard" to pick up his feet a little. Whether or not they were really a "laggard" when it came to embracing RDRAM is debatable, but FWIW here's my take: Their stance always seemed to be something akin to "we'll be prepared for whatever our OEM's want, etc.". From what I read between the lines, I never got the impression that they were gung-ho on ramping up ASAP. Yeah, they'd do it, but they weren't going to push it. There was enough on the plate. So INTC wants to drive the technology to critical market mass at one speed, MU's a player that needed to have a reason to put its foot down on the accelerator a little faster, given that they had only so much gas in the tank to get to where they're going. Maybe leaving a little wiggle room for .18 micron expenditures apart from those needed to meet RDRAM requirements sweetened the pot for MU, but since they redacted the numbers I guess it's tough to come up with a read on the breakdown on how much of the $500 million will be needed to meet the RDRAM milestones and how much they can use for other devices. Who knows? As far as the loopholes, I guess it largely depends on how hard INTC wants to argue their case in the event any dispute arises. Good trading, Tom