Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : Graham and Doddsville -- Value Investing In The New Era -- Ignore unavailable to you. Want to Upgrade?

To: Knighty Tin who wrote (1167)	1/31/1999 7:44:00 PM
From: porcupine --''''>	Read Replies (1) \| Respond to of 1722

In this weeks Barron's, the ever-caustic (and, so far, ever-mistaken) Alan Abelson has some fun at the Fed Chairman's expense. Greenspan, as quoted in an earlier post, made the unfortunate observation that there must be "something fundamentally sound underlying" the current Internet hype. Of course, this was dangling verbal catnip in front of Abelson's journalistic shnozola. Abelson credits a colleague with the observation that this is akin to saying that the first great financial bubble, Tulipmania, must have been supported by "sound fundamentals". Abelson then spends several graphs facetiously speculating that Greenspan is angling to have the Fed acquired by AOL, to form something along the lines e-Fed, or the like. This reminded me to ask a question I've been meaning to ask for some time: Am I correct in presuming that the first bubble, Tulipmania, was coincident with the first widespread availability of credit for purchasing assets?

To: Knighty Tin who wrote (1167)	1/31/1999 10:50:00 PM
From: porcupine --''''>	Read Replies (1) \| Respond to of 1722

"Ask Michael Burke" credited by Sunday NYTimes with uncovering Micron earnings report discrepancy. MARKET WATCH -- January 31, 1999 Oh, Those Pesky Little Financial Details By GRETCHEN MORGENSON NEW YORK -- This is a tale of two earnings reports from Micron Technology Inc., one of the world's largest makers of semiconductor chips. Micron also happens to be a very hot stock. The reports detail the results for the company's first quarter, which ended Dec. 3. One is a news release issued Dec. 23; the other is the quarterly report, or 10-Q, filed with the Securities and Exchange Commission on Jan. 5. The two reports differ in intriguing ways. The most glaring discrepancy is in Micron's sales of semiconductor memory products. The news release says these totaled $428.1 million in the quarter. The 10-Q says they totaled $409.5 million. Which number is correct? A Micron spokeswoman, Julie Nash, said: "There was a $19 million reclassification of numbers that went from semiconductor memory products sales into 'other.' These were sales that were relative to providing semiconductor revenues, but they were actually service fees." She said Micron, of Boise, Idaho, found the error and fixed it in the 10-Q. But it did not publish a corrected news release. "It was not material," she said. So it's immaterial that 4.3 percent of the company's semiconductor sales weren't semiconductor sales at all. None of this would matter if investors relied on 10-Qs rather than news releases for investment information. But that is not the case. Dan Niles, an analyst at BancBoston Robertson Stephens, has a strong "buy" rating on the stock. The revenue number he has used in recommending the stock is the $428.1 million from the news release. Niles did not know the number was incorrect until a reporter told him on Friday. He said the new, lower number would not change his positive view of the company. There is another interesting difference in Micron's two reports. The 10-Q states that net sales of semiconductor memory products increased 10 percent over the previous quarter, a result of an 18 percent increase in the chips' average selling price being partly offset by a 10 percent decline in megabits shipped. The news release, however, is mum about the decline in shipments. It is a big deal to show a decline in megabits shipped. With chip makers constantly improving the memory capacity of their products -- also known as the yield -- a drop in megabits shipped is not good news. Why did the news release not mention this? Ms. Nash again: "The press release is a summary document used to discuss what we believe is of interest to shareholders and reflect company trends." Whether this passes the smell test is something Arthur Levitt, chairman of the SEC, may want to ponder. Levitt is justifiably concerned that companies make accurate disclosures to investors. Who uncovered the Micron discrepancies? Sleuths on the Internet -- specifically, three people who post comments on the "Ask Michael Burke" and "Micron Only" threads on Silicon Investor; and Larry Woods, editor of the Tech Review newsletter in Stoney Creek, Ontario. Two footnotes: Since Micron's news release came out, its shares have risen 49 percent. Not bad for a company that lost $46.2 million in the quarter. And on Wednesday, the company filed a registration of 2.75 million shares to be sold to the public. Copyright 1999 The New York Times Company