saying it all along. This is not a stock that you
invest in. Anyone stupid enough to believe that MU would
actually hit those absurd price targets deserves to loose
his shirt. Also don't hold your breath for this thign
to stay at 70. I would not be surprised to see a 60
or lower close next Friday. Congrats. to all those
on this board who understand this stock (ie.
Dumbunny) and are willing to go the opposite way if so
presecribed. Everyone else who is long now, it is still not to
late to sell, you can at least walk out with somthing
or minimize losses.
I agree with some of what you have said. However,
here is the picture I see:
1. The myths about
reduced sales levels from Q4 to Q1 were nixed by Micron's
own research of the past 4 years which prove that Q1
UNIT ships typically are not reduced from Q4 UNIT
ships. Since it could be reasonably expected that units
ships will remain approximately the same or increase,
and since more 128 Megabit products should be
produced, bits shipped in Q1 should be higher than
2. AVERAGE contract ASP will be higher in Q1 than Q4
for both contract and spot. There should be an
average decline in ASP going forward in Q2, but not a
dramatic drop. The increase in demand is much bigger than
back to school or Christmas 'bumps'.
per unit will be lower than Q4 as MU ramps .18 and as
more volume from ramping their new fabs drives cost
4. The decline in contract ASP will not exceed the
decline in cost per unit. Spot doesn't matter for MU as
most of their stuff is sold on contract.
income should, therefore, be much, much higher in Q1 and
should remain stable from there forward as the cost and
selling price are reduced at approximately the same
I agree this quarter undoubtedly will be Micron's
most profitable in a long time, and will not only
offset 1999 losses, but could offset the majority of
While the stock price does seem to
follow spot prices, long term stock trends follow more
closely with contract prices and overall industry
MU long is a reasonable choice.
Do not believe what you hear, read, or see.
Interpret the price action for yourself, and bear in mind
that there are entities that want you to 'take stock'
at the highest possible prices. You do not even have
to be watching the TV, even if you just have it on,
the message will get delivered through your ears.
Pretty insidious. What a gig.
You watch what
happens to a few of these things that get 'white -hot
hyped'. Better expect reversals real soon thereafter, and
not trust it to providence.
As there are many ways to skin cat, so the trade
can be very
profitable if MU sells lower,say to
As- Cost- (- $2.400 Mil) (270M/shs) avg $8.88/sh for
Less- + 1,317 Mil " avg $4.88/sh(if price
in Oct/Nov -est-i.e,below 70
sell what u bought-to recoup-
EST.(but must have finger on
Add +2,600 Mil -Sale 75 calls
Now- + $1,517 Mil Net Profit. Wala!(140% Return
She is there to help her man entrap buyers when
she hypes things,
so they (specialists) can UNLOAD
on you, along with a little positive soothsaying
from the upgrade gravy train analysts. Business as
usual. One has to wonder if they (CNBC) sell her
'There is stock to buy IN SIZE'. OOH,
OOH, OOH. 'There is a HUUUGE crowd around the post of
She-Wolf. Do not believe what you hear, they are attacking
you through your auditory canal.
You said "Koreans/Japanese haven't invested in
generation equipment". Koreans - esp. Samsung
definitely have, are at .18um in volume now.
is a bit behind. Samsung is also ramping new fab
for completion next spring. Japanese
Fujitsu for sure) have .18 out there, but it is not
aggressive at .18 as Samsung or Micron. But if
.15, well now no one is making .15 yet,
so the jury
Contract at $10 = $6 EPS at $5
are assuming 6*266M = $1.6B profit on per
profit of $5, implies 1.6B/5 = 319M 64M
I think the volume is in the ballpark (should
go higher - let's say 400M), but I can't
the ASP staying that high for a year.
another 5-6 weeks!)
Of course costs will drop too
(other than the new
equipment purchases .15 should
I can easily see $400M in 1Q, a seasonal flop in
(let's call that a draw), and the usual rise
demand (and no new fabs other than Samsung) online
3Q/4Q....perhaps $200M/quarter. $3 EPS FY00.
forecasting into 2001. (Hell I
can barely imagine
forecasting beyond 1Q).
I'm long but ready for it to
top $110 based on
how strong 1Q will be, then I'm
I believe the flaw is in expecting bit shipments
to be the same this quarter as last. The first
quarter (this quarter) is usually the slowest quarter
1. The DRAM has been shipped for the back to school
builds last quarter.
2. Most of the DRAM for the XMAS
builds was also shipped last quarter, although the last
of it is shipping now.
3. PC channel has been
thouroughly stuffed by October and orders for DRAM drop
4. This year there may also be an extra backlash if
higher prices mean systems get populated with less DRAM
on average than they did last quarter.
year there may also be a Y2K backlash due to the fact
that everyone who needed a corporate PC tried to buy
it with Y2K money, and that was all spent before
October. Not many corporate buyers left who need to buy
new PCs in the next few months.
Even so, this
should be MU's most profitable quarter in a long time.
The stock price is under pressure now, however,
because we are starting to get visibility in the SECOND
quarter and it is not pretty. Low demand AND low prices,
due to all the competition ramping back into SDRAM