Economist tells Legislature panel to expect slow growth

POSTED: 13:36 MST Thursday, January 3, 2008

by Brad Carlson

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Tags - economy, Wells Fargo

It’s likely to take all of this year and part of 2009 for the Idaho economy to improve from its current slow-growth mode, Wells Fargo regional economist Kelly Matthews told the Idaho Legislature Economic Outlook & Revenue Assessment Committee today. U.S. consumer spending has held up, but there are questions about how long that will last given the housing downturn and continued high prices for oil and food, Matthews said.

Idaho single-family home starts dropped 25.2 percent in 2006 and 41.7 percent through October 2007, compared to year-earlier periods, he said. Home sales dropped 33 percent in Ada County and 40 percent in Canyon County through the third quarter of 2007, from a year earlier. Median prices dropped 1 percent in Ada and rose 1 percent in Canyon from the first nine months of 2006.

Matthews said a reduction in Idaho home starts helps stabilize the market. But prices must drop to absorb excess inventory to the point that home starts return to normal, he said.

He expects 2 percent job growth in Idaho this year. The rate of job growth is about half what it was in mid-2006, he said.

A Wells Fargo report presented to committee members said the Idaho economy will continue to slow as housing weakness takes toll, but the state’s economy will perform relatively well as it eases into a more moderate pace of growth supported by strong fundamentals. Long-term strengths include low business costs, strong migration trends and reliable energy sources, the report said.

1 Comments

Micron on the razor's edge...from a blog analysis 1/3/08 on MyCon's true financials
Would Micron Bet the Ranch?
Warning: This post contains opinions and speculation.

Stevie Blunder may be willing to go down with the ship, but I do not think the power behind Micron is willing to let the ship go down. It is too strategically and militarily important for the US to let Micron go under. If that assertion is correct, then the question becomes when does Micron have to settle to avoid risking ALL. (Of course if you think Micron can buy with certainity the entire Justice system, MU will not have to settle.)

Here is a back of the envelope analysis of what would be left if Micron settled now:

Micron's book value is currently $10.23 per share on 758mm shares. The market value at $7.04 is significantly below that suggesting the market believes book value should be marked down. Micron's expected 2008 loss is .89per share. MU has been losing about 50% more than friendly analysts' expectations so I assume they will lose about $1.30 in 2008. A further massive restructuring is likely to include big severance costs (much larger than we have seen in the first round), big inventory write downs and other charges. To remove the threat of bankruptcy, MU would have to settle with Rambus. I include an estimate for those costs to show how close MU already is to the brink. (Free free to use all your own estimates).

$10.23 Book Value
-1.30 2008 Loss
$ 8.93
-1.00 Further restructuring
$ 7.93
-1.00 Rambus Past Damages
$ 6.93
-3.43 Minority Interest
$3.49
2.50 Minimum working capital for ongoing operation.
$0.99 Remaining unencumbered net assets.

You can rework the numbers dozens of different ways, but the result is clear: Unless Micron wants to bet the ranch, time is running out for a settlement. An AT liability of just $2 Billion plus any resonable estimate for past damages on infringement would drive Micron into Chapter 11 IMO.

Applejack has been set up for the fall already when Smith, Simplot's man on MU's Board, resigned and bad mouthed Stevie and other Board members for the problems he foresaw. I don't know if it will take a court loss or an AT Trial date to trigger a settlement, but the powers at Micron can see where this is going and they will settle well before the ship goes down.

Comment By Hector
Thursday, January 3, 2008 @ 5:09 PM

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