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To: Earlie who wrote (44372)	3/25/1999 8:00:00 PM
From: John Graybill	Read Replies (1) \| Respond to of 53903

this thread has been a "must visit daily" for many analysts' assistants And for some of the analysts themselves -- I was pleasantly surprised to see Tad offer his opinions here. Let me offer a belated "Welcome" to the frequently-quoted Bill Fleckenstein. If we quote them, they will come! Help yourself to some hors d'oeurves -- the smoked samon is excellent, and just flag down one of the waiters for some Chardonnay. You can have some of the Rice Krispies squares and Hi-C if you want, but it's supposed to be for Dan Niles. We keep quoting him, too. :-)

To: Earlie who wrote (44372)	3/25/1999 8:41:00 PM
From: Thomas G. Busillo	Read Replies (2) \| Respond to of 53903

Earlie, well, in that case they really should perform the same sort of exercise on MU's 1Q'99 earnings PR and the consolidated fins. that accompany it (if they haven't already) because it's quite interesting. MU states in its 12-23-98 PR that gross margin for semiconductor products was 9%. The 12-23-98 consolidated inc. statement show sales of semiconductor memory products as $428.1 mil. (428.1)-[(428.1)X(.09)]= 389.571 We know the gross margin on PC Systems was 15.0%. MUEI reported that a couple of days prior to 12-23-98 in their own release. The 12-23-98 consolidated inc. statement show sales of PC systems as $352.1 mil. (352.1)-[(352.1)X(.15)] = 299.285 Stop right there. We haven't even gotten to "other" and already if you add up those two COGS lines it comes to $688.856 mil. Total COGS is stated on the 12-23-98 consolidated income statement as $677.7 mil. So, how can "other" have a negative cost of goods sold of 11.156? The answer is, it doesn't. The margins must be wrong? No. The margins are consistent across their PR's and their 10-Q's. The consolidated COGS must be wrong? No. It's also 677.7 on the 10-Q. I find that most interesting. Let's see if things add up in the 10-Q in terms of COGS. semicon mem products: 409.5-[(409.5)X(.09)] = 372.645 PC systems: 352.1-[(352.1)X(.15)] = 299.285 Other: ? So without the COGS for other, we're getting 671.93. Total COGS is 677.7 We're okay so far and there's only one revenue classification still missing - other. Therefore the COGS for Other has to be 5.77 I'd love to see the calculation that enabled them to derive a gross margin of 9% for semiconductor memory products in their 12-23-98 PR using the revenue line of 428.1 (the line contained on the consolidated income statement accompanying the PR also dated 12-23-98), as I find it interesting that when the 10-Q is filed that particular gross margin still remains at 9% even though the revenue line it would appear to be derived from dropped 18.6 million and the COGS associated with those 18.6 mil. in reclassified revs. would be anywhere in a range of 0 to 5.77 (obviously somewhere in the middle of the extremes backed out of the above series of calculations). I'm trying to be as fair as possible in the above. I don't think transfer pricing has anything to do with it because these are consolidated numbers we're talking about. As far as rounding goes, the 15.0 was given as 15.0 in the 10-Q, but even adjusting for the possibly that 9% is somehow rounded, we still have the same problem. I also believe that any non-PC systems revs. booked by MUEI would fall under other in the consolidated financials. Other than that, I'm open to suggestions for any possible flaws. As far as Niles goes, I'm glad he changed the number to reflect historical reality. I'm still waiting for a reason as to why he was unable to do so shortly after being contacted by a New York Times reporter regarding the 10-Q changes. The changes made between Monday and today prove that he is obviously capable of changing historical figures in his research. What specifically was it that prevented him from exercising this exact same ability when it came to changing the historical figures in his own research in regards to the revenue reclassification on the 10-Q? Good trading, Tom