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To: Carl R. who wrote (45975)	5/25/1999 8:54:00 AM
From: sammaster	Respond to of 53903

before or after they pre-announce? i do agree that if the market doesnt crash that mu does have a chance of getting a decent bounce after it crashes since after the bad news is out people think things have turned around.. in reality i think things will get worse... samir

To: Carl R. who wrote (45975)	5/25/1999 12:03:00 PM
From: A. A. LaFountain III	Read Replies (2) \| Respond to of 53903

re: "Memory prices should firm in 6-12 weeks" A couple of reflections on pricing: 1) It's strange that such an elemental piece of the investing puzzle should be so poorly defined and tracked. It has become quite clear over the past several months that the tracking services (e.g., AICE and SmithWeb) are virtually useless; the Dataquest weekly reports have proven to be much more accurate (and I won't dispute the assertion that a link to an Excel cell using the random-number-generator function would probably be more accurate). It would appear that part of the problem stems from the increased disparity among the various DRAM types. When the market was strong last winter, it seemed that there was "part inflation" going on - the parts being quoted for representative pricing were mutating (e.g., PC-66 to PC-100 and x16 configuration). Then when pricing headed south, it becomes the most breathtakingly inexpensive parts being cited (the x8 configuration). ...The point is that we're not getting apples-to-apples all of the time. I recognize that this market isn't West Texas Intermediate, so the changing technology does have an impact. But it still seems that people are given a wide latitude to select their data points to undergird their arguments and that such a situation only serves to impair the investment process. 2) When we talk about firmer pricing, I believe that we have to be careful about what we're describing. The actual uptick in apparent prices that took place last fall (even after making some allowance for the effect described above) was a true aberration. In 1993-95, 4Mb DRAMs were flat for the entire three years, and that was pretty weird. Given the propensity of the industry to lower costs per Mb on an ongoing basis, "firmer" pricing could also be interpreted as a change in the second derivative so that costs can "grow under" the pricing curve; this could still lead to a reduction in losses or even a restoration of profitability even in the face of declining prices. ...It's my own take that when pricing declines faster than 25-30% per annum on a multiple-month basis, the stage is being set for flattish pricing just to bring things back to the mean. In 1H98, pricing appeared to decline by about 60%, so six months of flat to up pricing was needed just to get back on the curve. For the first half of this year, pricing seems to be headed for down 50% or so, implying that at some point in the not-too-distant future there would need to be (or at least might be) some firmer pricing just to provide an offset. What's interesting is the effort necessary to reconcile such a conceptual view with some of the fundamental supply issues discussed on this thread. - Tad LaFountain