FOOL CONFERENCE CALL SYNOPSIS*
By Debora Tidwell (MF Debit)

Micron Technology <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: MU)") else Response.Write("(NYSE: MU)") end if %>
2805 East Columbia Road
Boise, ID 83706-9698
(208) 368-4000
http://www.micron.com/

UNION CITY, Ca., December 17, 1996/FOOLWIRE/ --- Micron Technology released their first quarter 1997 results after the market close yesterday. They began the conference call by reading their press release. The release is available on Micron's web site at http://www.micron.com/mti/ir/financial/qr/1qr_97.html. The company reported net income of $20.6 million or $0.10 per share on net sales of $728.1 million, which handily beat the Wall Street consensus estimate of $0.04 per share. Net income compares to $328.5 million or $1.51 per share on net sales of $1,185.8 million in last year's first quarter. The lower figures this year resulted primarily from significantly lower pricing for semiconductor memory products. The net income this year included a $6 million ($0.03 per share) after-tax gain on the sale of an investment.

REVENUE MIX BREAKDOWN. For the first quarter, approximately 46% total sales came from DRAM. As they have commented in past periods, they have taken the SRAM line down quite significantly and it is about 1% at this time. PC system sales is about 46%. The rest is coming from contract manufacturing, module assembly services, and a little bit from government contracting. And, just in the breakout of sales between 4-meg and 16-meg, about 43% of the semiconductor sales were in the 4-meg and 54% in the 16-meg.

SEMICONDUCTOR HIGHLIGHTS. The company's semiconductor operations more than doubled megabit production in the quarter compared to the same quarter last year as a result of the conversion to 8 inch wafers in all fabs as well as the conversion to the 16-meg DRAM as the primary product. Right now they are anticipating the second quarter is going to have its challenges to stay in the low double-digit percentage increase. The increases that they realized from the 8 inch and the initial strengths of the 16-megs are tough acts to follow. The effect on net sales, however, was countered by an 84% decrease in the average selling price per megabit compared to last year. Average selling prices were also approximately 22% lower than last quarter. Gross margin on semiconductor memory products was 24% this quarter, a slight improvement over last quarter.

PC SYSTEM HIGHLIGHTS. Unit sales of PC systems were approximately 22% higher this quarter compared to last year's first quarter, principally due to an increase in sales of desktop systems to government entities and the introduction of the Micron Millenia TransPort notebook systems two quarters ago. The gross margin on PC systems increased approximately 75% this quarter versus last year's first quarter as costs of components decreased at a faster rate than reductions in PC system selling prices. Inventories for the PC side of the operation increased during the first quarter by approximately $40 million. This is directly attributable to the fact that they had unsatisfied demand for certain of their products. They are seeing their per-unit memory content of their average PC increasing to about 31 megabytes per system.

PC SYSTEM SALES IMPACTED BY PARTS SHORTAGES. PC system unit sales were relatively flat year-over-year. Shortages of Pentium Pro microprocessors and certain high-performance disk drives hampered system sales. When they came out with their Pentium Pro strategy, they basically offered a system that had a dual-Pentium processor capability. Within the quarter they actually shipped a significant portion of their systems with dual Pentium Pro processors onboard. Hence, that kind of configuration ate through their allocation a lot quicker than they had anticipated. They also had expected they would be able to go back to Intel to get additional processors. As it turned out, there were no more available beyond their allocation. In fact, there was some indications that they would not get all of their allocation. They are still cautiously optimistic that they will be able to get the processors they need within this next quarter, but there is still no guarantee that this will occur.

CASH. During the quarter, the company repaid all outstanding amounts on its bank lines of credit and ended the quarter with consolidated cash and investment balances of $228 million. As they consider their long-term capital spending and R&D funding requirements, they will continue to evaluate a number of financing alternatives. In this regard, they expect to file an undesignated shelf registration statement for up to $1 billion in debt or equity securities to give them the flexibility, if and when financing is advantageous, to effect an appropriately sized offering.

INVENTORIES. They were pleased to announce that, given the state of the industry and the DRAM business in particular, they think they ended the quarter in fairly good shape from a variety of benchmarks. The one they like during market conditions like this is the inventory position. In that regard, Micron finished with year-end inventories down significantly from the prior quarter. The 4-meg DRAM inventory was reduced from approximately 7.2 million units at the end of last quarter to just under 5 million for this quarter. Based on discussions they have had with the other major manufacturers, they get a sense that the trend they have had on inventory is not unusual. They think Micron's inventories are lower than most of the companies they compete with, but they think most of the competitors have also indicated that their inventories have also come down. Where Micron may have reached 1.5-2 weeks and are now down to far less than that at the peak times, they think the others who were up in the 1.5-2 month range are now down in the 2-4 week range. The 16-meg DRAM was reduced from approximately 1.7 million units last quarter to approximately 700,000 units at the end of this quarter. The current pricing they are seeing for 4-meg is in the $2.00-$2.25 range and the 16-meg is in the $7.25-$7.75-$8.00 range depending on the package, speed grade, and a variety of things.

PRODUCTION MIX. On the production side, the bits produced in the form of 16-meg DRAM exceeded the 4-meg by approximately 50%. In the current fiscal quarter, their expectation is that the bits produced as 16-meg DRAM will exceed the 4-meg by approximately 7-8 times. So, they have clearly moved their 16-meg DRAM into position as the main workhorse and will base their future 4-meg production mainly on customer forecasts and market opportunities. Their 4-meg is still a very cost-effective and competitive product.

16 MEG DRAM PRODUCTION STATUS. The R&D and manufacturing groups have done a great job on their 16-meg synchronous DRAM and they recently sent the first 100mHz samples out to some of their customers. They have been running these parts internally and to-date have not seen any failures. They delayed their syncronous DRAM in favor of a faster version of EDO memory called burst EDO. That set them back fairly substantially in the synchronous DRAM, so they are very happy with their R&D and manufacturing groups for getting this part out very quickly. They think they are very well positioned for the synchronous DRAM market as it develops, which they anticipate will be in the mid-to-late 1997 for the high volume market that Micron likes to be a part of. In terms of ramping the product, they don't have anything that is going to inhibit them from doing the manufacturing lines, the bottleneck will be how quickly the customers get the part, design it, and get qualified and that doesn't happen very quickly for anyone who supplies synch DRAM, not just Micron. The market is just not that big right now. They don't have limitations internally on ramping the part, it's more a matter of what the customer's schedule is. In reference to the cost, they think right now it is more expensive to build just because of the pure amount of silicon that is consumed in this part.

64-MEG DRAM STATUS. On the 64-meg DRAM front, they have sent samples of their 0.3 micron process 64-meg to several of their major customers and are awaiting their feedback. They feel the real transition in that part will occur when the 64-meg is below 100 square millimeters which most likely will require 0.25 micron technology. So, the real push on 0.3 micron will most likely come as they move into the 16-meg 0.3 micron process. In fact they currently have a yielding 0.3 micron 16-meg design in the fab right now. They are not limited on ramp because of the facilities. They don't anticipate 64-meg being at much volume until well after the 16-meg's end cycle. Most 64-meg DRAMS are 3.3 Volt parts and cannot be used on SIMMs etc. Some manufacturers will offer 5 Volt parts but a lot won't. The 64-meg isn't likely to become high volume until there is a density problem on the desktop PCs and that means you have to have more than 64 megabytes average going out before you burn up all the slots which isn't the case today. For four generations now they have been hearing how technology is going to skip a generation and move on to the next one -- skipping 16-meg and 16-meg having a short life -- and it just never happens. It's really related to cost per bit.

GRAPHICS PRODUCTS. On the graphics side of the house, they are sampling their 40 nanosecond 256x16 DRAM which will give customers another speed enhancement on their EDO graphics based boards. As well, their new synchronous graphics ramp continues to ramp up. They should have that part in the hundreds of thousands of units by the first calendar quarter of 1997.

SRAM UPDATE. On the SRAM side, they have transitioned heavily to the 2-meg SRAM. They are currently running several hundred thousand parts per month. They continue to run in the fab, but it is produced mainly to-order for their strategic accounts.

FLASH MEMORY UPDATE. On the flash side, they have had good customer acceptance of their 2-meg and 4-meg flash and are beginning to ramp volume shipments of that product which is a 2 and 4-meg loop-locked Intel compatible.

NEWER DRAM TECHNOLOGIES. With regard to newer DRAM technologies, their target is that whatever the industry standard part becomes, they will provide it. So, in reference to RAM bus versus synch link, Intel wants to encourage people to at least make a RAM bus part and Micron needs to make whatever the standard is. It doesn't mean that they won't make other alternatives because it is very likely that there will be various standards going forward. They think it is anticipated that RAM bus will be at least part of the market. These technologies are after the synchronous DRAM era and therefore would look at 1999-2002 for much volume demand.

* A Fool conference call synopsis represents an effort to highlight the salient points of a conference call and should not be taken as an authoritative accounting or transcription of the entire event. Note: Statements made by a company other than historical information may constitute forward-looking statements for which the company can claim protection under the Safe Harbor Act. Please consult the company's filings with the SEC for information on risk factors which might cause actual results to differ materially from the information contained in these forward-looking statements.