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

To: Thomas G. Busillo who wrote (46051)	5/30/1999 2:43:00 PM
From: Skeeter Bug	Respond to of 53903

tom, they can't be talking about units b/c we always here how mu products are priced at a premium. if so, their units share w/b less than than their rev share. the bottom line is that many folks are stupid and these clowns leverage that fact to their own advantage.

To: Thomas G. Busillo who wrote (46051)	5/30/1999 5:49:00 PM
From: Thomas G. Busillo	Respond to of 53903

Skeeter, maybe they really are using units only the "units" aren't bits or megabits (depending on where you put the decimal place), but actual physical units. In my back of the envelope calc.s, I took the baseline for "units" to be total bits. That's the metric. But what if they are equating 1 16Mb unit with 1 64Mb unit? Sure. I guess if you are one of the firms still producing lower densities you would have a higher "market share" in terms of physical units. But those share figures would be utterly meaningless since it would proport that 4 16Mb chips count as "4" v. 1 64Mb chip counting as "1". It's a completely bogus methodology. I'm not sure that's what they're using. Too bad no one asked them on the CC last quarter to explain the methodology they used to arm the Kipster with his market share projections back at the Goldman Conf. Good trading, Tom

To: Thomas G. Busillo who wrote (46051)	5/31/1999 6:59:00 PM
From: A. A. LaFountain III	Read Replies (4) \| Respond to of 53903

Tom: re MU market share As you know, I have focused on this issue ever since the letter to Electronic Buyers' News in the summer of 1997 calling Tom Kurlak's depiction of Micron's share as 20% into question. The data didn't support the claims then and it hasn't supported similar claims since. The analysts who have made such claims appear to have been passing on the market size descriptions of the company. This is, unfortunately, all too common a practice, but the most irksome thing about it is that there is never any attribution. While we are not practicing science, we should still be able to track such claims back to their ultimate source. Most of the time, such analysts do not even bother to credit the company as the source of the data (and I have written on this phenomenon on this thread before). When I asked people at Micron about the data, the clarification I received was that the reference was to megabits of 16Mb and 64Mb DRAMs sold into the main memory market. Thus defined, such a market might be able to support Micron's claim. However, two points need to be addressed - the increasing amount of DRAM being sold in higher density configurations (the 128Mb to date and what should soon be an increasing amount of 256Mb) and the amount of DRAM sold as graphics RAM (where vendors such as Mosel-Vitelic are shipping what I understand to be an overwhelming portion of production). I believe that it is misleading to define the market as narrowly as Micron is defining it and then spend a considerable amount of time at the April analysts' meeting talking about the rejuvenated effort in SRAM (and flash). After all, we are not buying or selling a derivative based on the DRAM market, we are dealing in the equity of a corporation. The point is that the most important metrics are revenue and the costs associated with its generation. All of this other stuff is subordinate to that particular discussion. The intrinsic value of the stock has nothing to do with units or market share per se, but everything to do with the discounted value of the future stream of earnings. So forget about "market share" claims! I would think that it is much more fruitful to focus on Micron's return on investment. If that is insufficient to support sufficient reinvestment that would allow Micron to participate in the glorious future of DRAM, then the whole thing becomes a confidence scheme (interpret that as you will). There appears to be an excellent likelihood that we will soon begin to see a cyclical upturn that could significantly enhance DRAM profitability. But it is important to recognize that profits are not necessarily the same this as an economic return - not losing money is not equivalent to generating a sufficient return to shareholders. Personally, I believe that the dynamics of the industry in general and Micron in particular are dramatically different than in 1994-95. While many observers continue to express glee at the prospects of Micron's leverage (just a couple of bucks of profit per unit X a gazillion units = Monster Profits), I marvel at how little attention is paid to MUEI as a relative drag on margins this cycle compared to the last big upcycle. And, again, the competitive issue isn't really about how many marginal vendors drop out at the bottom, it's about how many pile back in at the top - and it would seem to be a little too early to make any definitive claims about how that process is likely to pan out. In the meantime, the response of the more bullish analysts is to reiterate their Buy ratings even as they ratchet down their EPS estimates and their target prices. The case can be made that a real buy point might just appear when some of them capitulate to the current reality. - Tad LaFountain