QUOTE AND NEWS
SeekingAlpha  Jul 22  Comment 
By Andres Allende, CFA: What a classic. A promising secular growth story gives birth to a difficult industry. Good and bad managed companies drive extreme competition. The "arms race" is inevitable and bust-follows-boom-follows-bust for the memory...
TheStreet.com  Jul 21  Comment 
NEW YORK (TheStreet) -- TheStreet Ratings team rates Micron Technology Inc.  as a "buy" with a ratings score of B. Shares of Micron Technology are lower by -0.12% to $33.11 in early-afternoon trading on Monday. TheStreet Ratings Team has this...
Motley Fool  Jul 20  Comment 
The sudden demise of a CEO is shocking, but not necessarily detrimental to a firm's performance -- fundamental and otherwise.
SeekingAlpha  Jul 18  Comment 
By Shock Exchange: (click to enlarge) Source: Anchor's Anti-Bullying Message Via Mashable.com Earlier this week SanDisk Corporation (NASDAQ:SNDK) shot the lights out on it Q2 earnings. The company's Q2 revenue of $1.63 billion increased 11...
Motley Fool  Jul 17  Comment 
Shares of Microsoft, eBay, and SanDisk were among the most actively traded tech stocks on Thursday.
TheStreet.com  Jul 17  Comment 
NEW YORK (TheStreet) -- Micron Technology  fell Thursday in sympathy with SanDisk , which issued third-quarter guidance below analysts' expectations. SanDisk expects revenue in the range of $1.675 billion to $1.725 billion for the third...
SeekingAlpha  Jul 17  Comment 
By Shock Exchange: Yesterday SanDisk Corporation (NASDAQ:SNDK) had its Q2 2014 earnings release and shot the lights out just like we predicted. Second quarter revenue of $1.63 billion increased 11 percent on a year-over-year basis and increased 8...
SeekingAlpha  Jul 16  Comment 
ByAdam Betancourt: Over the last few months, I have been tracking companies within industries that have lagged their overall sector. I have continued to come across a specific grouping of companies that I feel will deliver a positive risk-adjusted...
SeekingAlpha  Jul 16  Comment 
ByElectric Phred: SanDisk (NASDAQ:SNDK) reports their 2Q earnings after the market closes. Whisper number is $1.50 versus an analyst consensus of $1.40. If SanDisk presents encouraging numbers, or even encouraging news about the state of its only...
SeekingAlpha  Jul 16  Comment 
By Arie Goren: Micron Technology Inc. (NASDAQ:MU) stock has surged strongly since the start of 2013. In fact, its relative strength index (RSI) technical indicator is indicating overbought conditions. Since the beginning of the year MU's stock has...




 

Micron Technology (NYSE: MU) manufactures dynamic random access memory (DRAM), NAND flash memory, and complementary metal oxide semiconductor (or CMOS) image sensors. DRAM and NAND provide memory storage and retrieval for various electronic devices such as personal computers and MP3 players; iPod Nanos, for example, utilize NAND memory to store songs. CMOS sensors are used to produce images for camera phones, digital camers, and other imaging devices.

Historically, Micron has been heavily DRAM-oriented. Dangerous oversupply of DRAM memory has forced selling prices to drop between 24% - 60% per year. This immense downward pricing pressure has forced Micron to diversify its product portfolio and produce more NAND and CMOS products.

The manufacturing of DRAM and NAND is somewhat similar allowing memory makers to adjust production volume depending on industry cycles (i.e., produce more NAND when DRAM demand is low). While this makes NAND a logical market for Micron, the company must compete with NAND heavyweights such as Samsung and Sandisk (SNDK). Micron's joint venture with Intel (INTC) announced that they have produced a high speed NAND flash memory technology that is supposedly five times faster than conventional NAND.

Business Overview

Micron generates income through the sale of its memory products. It has diversified its product portfolio by becoming a leader in CMOS imaging and a producer in flash memory. Micron has a very strong patent portfolio that gives it a technological edge on some of its competitors, but a difficult pricing environment makes it hard to turn a strong profit.

Business & Financial Metrics[1]

In 2009, MU incurred a net loss of $1.83 billion on total revenues of $4.29 billion. This represents a 13.3% increase in net loss on a 17.7% decrease in total revenues from 2008, when the company lost $1.62 billion on $5.84 billion in revenue.

Business Segments[2]

MU operates in two reportable segments:

Memory (89.3% of total revenue): This segment produces and sells DRAM and NAND flash memory.

Imaging (10.7% of total revenue): This segment produces and sells CMOS image sensors.

IMAGE:MU-Segments2009.jpg[2]

Trends and Forces

Downward Pricing Pressure

The DRAM market has been plagued by huge price cuts over the years. This downward pricing pressure is driven by the oversupply of DRAM memory in the market, along with the additional price pressure from PC makers. The price decreases sometimes result in the selling price dipping below production cost, making for a very difficult business environment. The cause of this oversupply is because Microns and its competitors must build multi-billion dollar facilities to make the memory devices, but then they operate the facilities at almost 100% capacity to make up the fixed cost of the factory, creating huge oversupply. Given the production correlation between NAND and DRAM, the introduction of NAND into Micron's arsenal may be able to take away some of fixed cost pressure of the production facilities. At the same time, NAND is exposed to similar supply issues.

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Countering Oversupply

If demand is high and Micron is able to find ways to lower manufacturing costs then the huge supply is not as much of a problem. Unfortunately, supply frequently tops demand and lowering manufacturing costs at an effective rate is difficult. Memory producers hope the release of Windows 7 will soften the impact of oversupply by helping increase memory demand for the memory-intensive software. Increased demand from emerging markets could also help relieve pricing pressure. Micron has one of the strongest patent portfolios in the industry, which allows it to have a technological edge over many of its competitors. Micron has consistently ranked in the top 10 of companies with the most patents issued per year. In this industry, innovation and technological advancement is paramount considering the constant need to lower manufacturing costs and replace obsolete products.

Making Its Way into the Flash Memory Market

Micron's entry into NAND memory provides a complementary product to DRAM and gives Micron a hand into a new market. Demand for the iPhone, iPod and similar products could be a major driver of flash memory over time. On the other hand, Micron acquired Lexar which was a low-profitability independent flash memory manufacturer. In addition, Micron must compete with the established flash memory producers in Samsung, Sandisk (SNDK), and Toshiba (TOSBF). To help build market share, Micron is involved in a joint venture project with Intel (INTC) on producing NAND memory.

A major boon to the demand for flash memory could be on the horizon as laptops increasingly adopt flash memory as hard drives. Traditional magnetic spinning hard drives are less stable, use 10 times as much energy, and are slower; they are however, much cheaper per unit of memory.

Semiconductor Demand

Micron's profitability is highly correlated with the product cycles of various key devices that drive semiconductor demand. Cell phone technology and adoption plays a large role for PSRAM, NAND, and imaging. PSRAM is primarily used in cell phones, and camera phone technology increases imaging sales. Many of today's newest technology is smaller in size, but, at the same time, demand for memory capacity is greater. Smaller cell phones, specifically the iPhone, are major potential drivers of NAND demand.

Competition

Micron faces formidable competition from essentially every market in which it operates. Nearly all of Micron's products act very similar to commodity products. This means they have relatively short lifespans and product timing is not only important, but also very difficult. Major competitors include:

References

  1. MU 2009 10-K pg. 29  
  2. 2.0 2.1 MU 2009 10-K pg. 74  
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