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.

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

To: Fabeyes who wrote (44499)	3/28/1999 7:47:00 PM
From: A. A. LaFountain III	Read Replies (2) \| Respond to of 53903

Fabeyes: Re "what did Samsung have to say?" I did meet with a Samsung market analyst on Friday, who volunteered some interesting perspectives. I don't feel that I'm at liberty to share all of the information (I probably should have pinned him down on each data point as to what was sharable). But here are some of the key points: 1) Samsung's market share is slightly over 20% for the first quarter (assuming that my 1Q DRAM market estimate of $5.1 billion is correct). He gave me monthly production by part type, and while Samsung's 16Mb and 64Mb combined revenue total is only slightly greater than MU's 2QF99 DRAM revenue, the fact that Samsung is selling significant amounts of 128Mb parts makes a difference. But the source of most of the increased revenues compared to MU is a large amount of SGRAM (VRAM). Put it all together, and Samsung is shipping over $1 billion of DRAM in the March quarter, which places it 50% above MU's DRAM revenue level. 2) Samsung is coining money in 64Mb DRAM right now. In the first quarter, the pricing and cost data he shared generated a higher operating margin per part than MU's 32% semiconductor gross margin (the difference in the two margins is that operating margin is after R&D and SG&A). While I doubt that the dollar amount of operating profit per part remains constant (given the current shape of DRAM pricing decline), the possibility of bit growth may protect total operating profit dollars. 3) It would therefore appear that even with the recently publicly announced increase in Samsung's capital spending plan (from $1 billion to $1.2 billion), CapEx will be more than covered by cash flow (income plus depreciation). This company doesn't appear to be financially hindered in the slightest at current business levels. 4) Let me stress that this was my first face-to-face with the gentleman in question, so I have no track record with his data. But what data he showed me was detailed, elegant and impressive. Therefore, I'm inclined to give him a high level of credibility until proven otherwise. I'll be away on vacation for the next week, so I'd appreciate it if no earthshattering events are allowed to transpire while I'm away (and trust that thread members do their utmost to keep everything under control)! - Tad LaFountain P.S. I used to work at Bear, Stearns four years ago when Nimal Vallipurim at Everen was the assistant to the semi analyst. I would have hoped that his analysis would have improved over the past several years (vis-a-vis his comments about DRAM market share), but this reminds me of the time in the summer of 1995 when I, as the equipment analyst, informed Nimal and Andy Neff (the semi analyst) that I was raising my 1995 equipment growth forecast to 60% after it had increased 44% in 1994 (it ended up increasing 64% in 1995). I pointed out that this equipment was to support a semiconductor industry that grew over time at 16-17%, and that there was no way that this much capacity could be added without severe repercussion. Their response was to increase their 1996 semiconductor growth forecast from 25% to 33% because they believed the industry would be able to better meet demand. Some people just don't get it. - TL