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.

Politics : Ask Michael Burke -- Ignore unavailable to you. Want to Upgrade?

To: Mike M2 who wrote (46007)	2/7/1999 3:31:00 PM
From: J. P.	Read Replies (1) \| Respond to of 132070

<<I received the latest Hickey yesterday - he suggests MU may turn a profit this Q >> Today's resolution of the work stoppage at LG Semicon in Korea does not play in MU's favor, to say the least.

To: Mike M2 who wrote (46007)	2/7/1999 4:05:00 PM
From: Skeeter Bug	Respond to of 132070

will, i also think mu may turn a profit. however, it will be measured in pennies, not dollars...

To: Mike M2 who wrote (46007)	2/7/1999 8:46:00 PM
From: Earlie	Read Replies (3) \| Respond to of 132070

Mike: Fred and I are good friends. I have enormous respect for his excellent research. I genuinely believe that he is the best analyst in the PC/semi arena in North America, and that includes even Tom Kurlak and certainly myself. Once in a while, we see things a bit differently. Usually when this happens, he's right. I've posted a few thoughts of late on the MU thread. Short term, there is indeed a possibility that MU may reduce the reported loss and even (given their accounting sleight-of-hand) the possibility that a minuscule "profit" could be shown. I would suspect that Fred is aware that MU is rapidly solving its test difficulties and believes, as I do, that this will brighten up production output. That said, I will stay with my current perspective which is that the company won't make it to profitability, and that even if it did, it won't matter now. Here's my thinking and I invite counter commentary, as that is why each of us post. - The short position on MU has already been "assaulted". The run from $20 to $80 made cannon fodder of most. Only the very resolute remain. - As a result of Dave, Tom and Skeeter, the company's attempt to mask a bad quarter was exposed. Additionally, the company's filing of a secondary (to sell insiders' optioned stock) provided the street with a "probable motive" for an extremely dumb move (given the SEC's "9 point program"). Few things are more potent as "sell" motivators for institutions than the word "investigation". - Some stuff that we dug up (that amazing "must buy" TXN contract, the necessity that MU spend $1.0 billion to upgrade those TXN plants, etc.), has also had impact on some "size" guys. The former point is indeed a staggering consideration. In effect, MU must purchase all production from those TXN plants (so long as they meet spec), IRRESPECTIVE OF MARKET CONDITIONS. Yuk. This is a time bomb. Precisely when most memory producers are trying to shed capacity, MU not only takes on more, it also HAND-CUFFS itself to all that excess production. Worse, these plants are not cutting edge, which means that their produced output will be EVEN MORE EXPENSIVE than MU's own production. Double Yuk. - The most important revelation emanating from the 10-Q was the fact that the $2.0 billion (current market) of stock owned by TXN and INTC will be "free trading" in April. MU is largely institutionally owned (close to 85%). The large institutional owners of this stock did not expect it to run so far. They know that a big block of stock overhangs the market and they now know when it will come out. They will depart early. TXN will use a shovel on their stockpile of MU stock. (See earlier posts for reasons). INTC's holdings allow a more leisurely exit, but the current stock price must appear insane to them. Remember, this firm knows what a mess the semi situation is,....it is not a lamb. It will sell and fast Unknown to the public, an extremely potent "ramp" in yield is underway, particularly in the Orient. By way of example, Two of the largest firms in the world will effectively double their mbit production over the next few months. No typo,...DOUBLE! With the PC sales situation deteriorating, and most semi sales ending up in a PC, this reality is as ugly as the bottom of my feet, for the more knowledgeable. It ensures continuing price pressure. I look for a $6.00 price for 64 mbit chips before Summer, maybe lower. There has been plenty of "disappointing results" emanating from the semi/PC sector and this is guaranteed to worsen, given the jammed channels. We're going to have a nasty "warnings session" for Q1. It will weigh on MU's stock price. As I noted on the MU thread, the analysts will pump it up, while their trading desks carefully feed it out . Nurse the lambs, don't kill them with forced feeding. Institutional selling will grind the stock down, even as "good news" is promulgated. I noted above that Fred usually proves more accurate on those rare occasions when we see things a bit differently. I know he thinks MU is a large and odorous deposit of a rodent's defecations. This is a "timing" issue, and I'm usually "Earlie". (g) Time will tell Best, Earlie