Posts for Ticker ‘DRAM’

Two Analyst Takes On Micron Analyst Meeting (MU)

We have been watching Micron Technology, Inc. (NYSE: MU) for quite some time.  We even listed it as a "turnaround that hadn’t turned" and we have noted how the company is in a strange position because DRAM is now a commodity that is no different than gold, rice, or sugar.  The difference is that through time the prices of DRAM only seem to fluctuate on whether or not the price falls 1% each quarter or 10% each quarter.  This morning we are showing two takes from analysts that attended Micron’s analyst meeting yesterday.

The first take is from Goldman Sachs, which rates Micron with a Neutral rating.  Goldman noted that while DRAM price have stabilized in recent weeks, they still think considerable oversupply is going to persist.  The firm also noted that Micron is looking for a DRAM partner to expand on its 300mm capacity.  Another issue is weak NAND fundamentals for the foreseeable future with average sale prices to be down 40% to 50% from the last quarter.  While Goldman noted Micron’s de-consolidation of the image sensor operation, an IPO is not expected anytime soon.  Goldman Sachs is maintaining its Neutral rating with 2008 targets at -$1.22 EPS and 2009 targets at -$0.20 EPS.

American Technology Research has a different take.  For starters, it has a Buy rating on Micron with a $10.00 price target.  AmTech noted that Micron is lowering costs as a central component of their strategy. In particular, they project industry leading NAND gross margins in 6-months. Pricing has stabilized over the last several DRAM negotiation periods and seasonal factors have evened out NAND prices despite weak demand. Their capital expenditures are stable and the future expenditures will be related to market data. Additionally, MU is seeing results in their investments in 300mm capacity. MU will also see flat contract prices early this year in the bottoming out DRAM market. 

This tied right into Qimonda article asking if it was a buyout candidate this week.

So far in early trading, Micron shares are down slightly more than 3% at $6.89, and the 52-week trading range is $5.47 to $14.20.

Jon C. Ogg
February 8, 2008

Posted on: February 8, 2008 – 10:13 am in Analyst Calls, Semiconductor, , ,

Micron Rumors & Reports May Be Its Only Hope (MU, TSM, STM)

If you have tracked Micron Technology (NYSE: MU) over the years you would likely have reached the conclusion that the largest US-based and US-fab DRAM manufacturer wasn’t even cyclical.  You’d maybe even accuse it of having a secular negative trend.  Micron has been in a commodity business for over a decade now, but the only difference is that wheat and corn prices go up and down.  DRAM seems to only go down, at least on a secular trending.

Shares sit above $9.00 today and the 52-week trading range is $7.82 to $15.05.  Its multi-year trading range is not that much different.  Today there are rumors abound that Micron may sell off its Image Processor Unit to Samsung Electronics.  This rumor is based upon a report noting that Samsung was considering an acquisition of Micron’s image sensor operations. 

If Micron will pick up the phone, it should have an easy audience besides just Samsung.  Foreign chip giants like STMicroelectronics (NYSE: STM/ADR) and Taiwan Semi (NYSE: TSM/ADR) immediately come to mind and with the US Dollar trading like a Peso they’d be getting an on-sale asset (or assets) at an extra discount. 

Micron has been shown a path here that Wall Street may reward.  Even if Micron is not selling the unit to Samsung, the company should consider selling it and/or other units to someone.  Micron could also at least consider splitting itself up after that has also been discussed by many in the past.  This has been under review for the 247WallSt.com Special Situation Investing Newsletter in the past, and perhaps another review may be worth a closer look for our subscribers.

Some troubled businesses may be in-play or out of favor, but when they are in trouble like Micron they should pay more attention to how Wall Street reacts when the stocks moves on certain rumors or reports.  Wall Street doesn’t like rewarding losers, particularly not during a credit crunch.  The good news is that with a $7 Billion market cap it trades actually very close to its stated book value.  Since this is not expected to get back to annual profitability until Fiscal 2009 it is the right time to consider its value options.

At the current prices, Micron even qualifies for our "10 Stocks Under $10" Newsletter.

Jon C. Ogg
December 5, 2007

Jon Ogg can be reached at jonogg@247wallst.com; he does not own securities in the companies he covers.

Posted on: December 5, 2007 – 11:34 am in Mergers and Buy Outs, Rumors, Semiconductor, Technology Companies, , , , , , , ,

Micron Braced For Losses (MU)

Micron Technology Inc. (NYSE:MU) is set to report earnings after the close today.  First Call has consensus at -$0.22 EPS and $1.4 Billion in revenues.  Next quarter is expected to show a loss of -$0.04 EPS on roughly $1.6 Billion in revenues.

Micron Tech. has been a real technology laggard in a market where so many stocks have performed quite well, particularly if you review the list of last week’s Window Dressing stocks that are up so much.  Shares are at $11.40, barely above the lows of the $10.30 to $18.18 range seen over the last 52-weeks.

Most of the actual recent analyst calls have become more positive and the average buy target appears to be close to $16.00.  Its chart has not been overly revealing and the recent $1.00 gain over the last couple weeks has removed any major oversold read.  Options traders seem to actually be braced for a move of up to $0.74 to $0.88 in either direction, which is insulation for a 6% stock move.  These options might be worth looking at because there are over 55,000 contracts in the open interest in the closest OCT Call Strikes ($11 and $12) and over 39,000 contracts in the open interest of the closest Put contracts.

The company has already cut 5% of its workforce, or has announced the cuts, and has said it is still expanding its IM Flash venture with Intel.  The company also noted lower DRAM prices affecting the quarter and higher production, but the US-DRAM leader did not offer up formal guidance.

Jon Ogg can be reached at jonogg@247wallst.com; he does not own securities in the companies he covers.

Posted on: October 2, 2007 – 12:56 pm in Earnings, Semiconductor, , , , ,