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

To: Thomas G. Busillo who wrote (44469)	3/27/1999 2:42:00 PM
From: Fabeyes	Respond to of 53903

>>They seem to believe that their cost cutting efforts can outrun whatever "blowback" occurs on the price/supply end and that in the long-run they'll be among the winners.>>>>>> This can very dangerous for Micron. If ASPs go down to $6.50 or so they can not survive long. The Koreans' have other revenue coming from the parent companies. Except for Lehi and the rest of MUEI there is nothing left to sell; and there are a lot of empty Fabs out there. I find hard to believe that Intel would come up with more money, so unless the find an Asian partner a year would pretty much ruin the company

To: Thomas G. Busillo who wrote (44469)	3/27/1999 3:00:00 PM
From: Earlie	Respond to of 53903

Tom: Good post. I agree with your "war of attrition" comments. Many "investors" haven't a clue that this is the current environment. Only in manias do "investors" pay big valuations for companies so involved. Best, Earlie

To: Thomas G. Busillo who wrote (44469)	3/27/1999 9:02:00 PM
From: Tim McCormick	Read Replies (1) \| Respond to of 53903

Tom, I guess I didn't latch on to that exchange as being a big deal at the time. This was probably an error in perception on my part, as I assumed Mu's answer was a given. I think it did highlight the reality of last quarters decent pricing being a result of seasonals, Korean strike and MU's test bottleneck. In other words, this pricing was temporary supply driven rather than demand driven. I believe the real eye opener for the bulls is the "bits per system flat" comment. As this is a cornerstone of their demand argument. Not to mention it is also what drove earnings in 1995, and is what propelled this stock into a higher profile level. The premium price this stock commands over the bears theoretical assumed value is largely based on the bulls hope of a 1995 like cycle high. If the sub $600 PC phenomenon is a powerful force in keeping bits per system flat, then even a better PC unit growth environment will not create the required demand for such a cycle. Tim

To: Thomas G. Busillo who wrote (44469)	3/28/1999 9:25:00 AM
From: Carl R.	Read Replies (2) \| Respond to of 53903

Tom, you have hit the nail on the head. This has always been the essence of MU's strategy, and the strategy has not always been appreciated by bears who thought that MU was a laggard. But the strategy is simple and can be paraphrased as "full speed ahead, and damn the torpedoes". MU will cut costs as fast as they can, and increase production as fast as they can, hoping to move ahead of the laggards. Woe be to those that fall behind. The Korean's are also following this strategy, and will no doubt keep up so long as they continue to be able to come up with enough money. MU has enough cash on hand, and enough cash flow, to keep up this pace for at least 2-3 years without a cyclical recovery. I'm sure that if a cyclical recovery does not come before that time, that we will see additional people dropping out of the market. On the other hand, if a cyclical recovery does come, MU will be very, very profitable. I think Zeev's estimate of a 10% maximum for profit margin of a low cost producer in a cyclical recovery is very low. MU will stay a low cost producer because they must. They will devote all their efforts to the DRAM business because it is essentially their only business, and they can't run away to another business. Will another cyclical recovery ever come? No doubt it will, probably next year or the year after. In the unlikely event that RDRAM takes over, a cyclical recovery will come sooner, rather than later. Carl