Micron Bounces Back From Chinese Lawsuit
Micron Technology Inc. (NASDAQ: MU) announced a temporary Chinese ban on a patent infringement lawsuit. Micron’s shares dropped on Tuesday as a result but they have bounced back in Thursday’s session after it came to light that this would have a minimal effect on its fourth-quarter revenues.
The patent infringement claims of United Microelectronics (UMC) and Jinhua Integrated Circuit were filed against Micron in retaliation for criminal indictments filed by Taiwan authorities against UMC and three of its employees and a civil lawsuit filed by Micron against UMC and Jinhua in the United States District Court for the Northern District of California for the misappropriation of Micron trade secrets.
The preliminary injunction enjoins Micron’s Chinese subsidiaries from manufacturing, selling or importing certain Crucial and Ballistix-branded DRAM modules and solid state drives in China. The affected products make up slightly more than 1% of Micron’s annualized revenues.
Since the fourth fiscal quarter is underway, Micron anticipates that the negative impact to revenue this quarter relating to the injunction will be roughly 1%, and the company continues to expect revenue to be within the previously guided range of $8.0 billion to $8.4 billion. Consensus estimates call for $3.32 per share in earnings and $8.27 billion in revenue for the quarter.
Joel Poppen, senior vice president, legal affairs, general counsel and corporate secretary at Micron, commented:
Micron is disappointed with the ruling by the Fuzhou Intermediate People’s Court. We strongly believe that the patents are invalid and that Micron’s products do not infringe the patents. The Fuzhou Court issued this preliminary ruling before allowing Micron an opportunity to present its defense. This ruling and other actions by the Fuzhou Court are inconsistent with providing a fair hearing through appropriate legal processes and procedures. Micron has a long-standing history of successful business operations in China, including a significant assembly and test manufacturing facility in Xi’an, as well as deep relationships with many valued China customers. Micron will continue to aggressively defend against these unfounded patent infringement claims while continuing to work closely with its customers and partners.
Shares of Micron were last seen up about 1.7% at $52.35, with a consensus analyst price target of $80.93 and a 52-week range of $26.85 to $64.66.