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

To: Fabeyes who wrote (44990)	4/11/1999 3:33:00 PM
From: A. A. LaFountain III	Read Replies (4) \| Respond to of 53903

Re: Bleak news I'm back from the MU meeting and will be sharing my thoughts with my sales force tomorrow at the morning meeting (so obviously am severely constrained in what I can share in this forum). But allow me to make a couple of observations: 1) My reluctance to embrace the MU story to the extent of several of my competitors was based on an interpretation of the data available to me that indicated that the DRAM segment would actually be facing excess supply longer than the semiconductor market. Therefore, a sustainable upturn was likely to commence after the bulk of the IC market saw it. 2) Therefore, I have believed that the propensity by many to define last fall's upturn as cyclical rather than seasonal was a mistake. In fact, recent events seem to indicate that seasonality was the driver last fall. 3) Conversely, seasonality could very well be the major impetus behind recent DRAM trends. To view what has been happening over the past several weeks as cyclical may be as much of a mistake as thinking the same way about last fall. 4) Management's presentation of market share data at the meeting was as off-base (in my opinion) as ever. But that's beside the point. The key consideration is that Micron has attained first tier position in the DRAM market in the minds of customers and competitors. This is much more significant than any share rate, and I believe is a point that is beyond contention. 5) Despite all the problems facing the company that have been enumerated on this thread (many of which I agree with) and even with the problems inherent in the current and likely future state of the PC market, there is still every reason to believe that a classic cycle in DRAM is in the offing. It may appear later rather than sooner, and it may be more muted than something like 94-97 (let's hope so, for everybody's sake), but there has been no apparent disconnect in the business to remove it from the industry's nature. 6) The financial shifts in the firm (especially the buildup of debt) are not without potentially adverse consequences, to be sure, but appear to be part of the cost of MU's ascension into that First Tier status. Financial leverage in a cyclical business that has short-lived assets goes against my conservative nature (but that's why I operate in the rational world of Wall Street instead of the craziness of commodity ICs!). In this case, it may well have been an unavoidable component of the strategy to gain sufficient customer mindshare. At the right price, this stock has value on more than a short-term basis. Put some of the recent developments together with an underlying shift to more appealing cyclical attributes and that price may appear in the not-too-distant future. Its appearance may well be masked by a bunch of really unappetizing news (that's generally how it happens). - Tad LaFountain