QUOTE AND NEWS
SeekingAlpha  7 hrs ago  Comment 
By William Tidwell: "Beginnings are always messy." - John Galsworthy "Necessity of action takes away the fear of the act, and makes bold resolution the favorite of fortune." - Francis Quarles For those of you, who like me, invest in Micron...
Forbes  Sep 19  Comment 
Though DRAM revenue declined marginally sequentially, both average selling prices and cost per bit decreased in the low-single-digit range, resulting in relatively stable DRAM margins compared to the last two quarters. On the Trade NAND side too,...
SeekingAlpha  Sep 19  Comment 
By SA Editor Miriam Metzinger: Stocks discussed on the Lightning Round segment of Jim Cramer's Mad Money Program, Thursday September 18. Bullish Calls: Plains All American (NYSE:PAA): "This is a great company. I would encourage you to buy...
SeekingAlpha  Sep 18  Comment 
By Shock Exchange: South Korean news agency Yonhap is reporting that Samsung Electronics (OTC:SSNLF) has started mass producing 20-nano mobile dynamic random access memory ("DRAM"), increasing data transmission speed and efficiency of memory...
TheStreet.com  Sep 16  Comment 
NEW YORK (TheStreet) --aMicron Technology was gaining 2.8% to $30.87 Tuesday after announcing its new M600 solid-state drive for PCs, tablets, laptops, and video capture systems. The new M600 SSD offers "class-leading" power efficiency,...
Jutia Group  Sep 16  Comment 
[Thomson Reuters ONE] - Micron`s M600 SSD sets new benchmarks for low power use and innovative performance enhancements Key Messages: Class-leading power efficiency helps extend system battery life Unique dynamic write acceleration ... Read more...
Market Intelligence Center  Sep 16  Comment 
After closing Monday at $30.02, Micron Technology Inc. (MU) presents an attractive opportunity to get a 9.56% return in just 123 days, which is an annualized return of 28.36% (for comparison purposes only). To enter this trade, sell one Jan. '15...
SeekingAlpha  Sep 15  Comment 
By William Tidwell: "There is nothing more difficult to take in hand, more perilous to conduct, or more uncertain in its success, than to take the lead in the introduction of a new order of things." - Niccolo Machiavelli - The Prince "If...
Jutia Group  Sep 15  Comment 
[at TheStreet] - Shares of Micron Technology (MU) fell in afternoon trading Monday following some insider selling. Read more on this. Micron Technology, Inc. (MU), valued at $32.15B, started the session at $31.40.   During the trading...
TheStreet.com  Sep 15  Comment 
NEW YORK (TheStreet) -- Shares ofaMicron Technologya fell 3.65% to $30.38 in afternoon trading Monday after Ronald C. Foster, the company's CFO, sold 20,000 shares of Micron stock, according to an SEC filing. The transaction occurred on...




 

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.

Error creating thumbnail

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  
Wikinvest © 2006, 2007, 2008, 2009, 2010, 2011, 2012. Use of this site is subject to express Terms of Service, Privacy Policy, and Disclaimer. By continuing past this page, you agree to abide by these terms. Any information provided by Wikinvest, including but not limited to company data, competitors, business analysis, market share, sales revenues and other operating metrics, earnings call analysis, conference call transcripts, industry information, or price targets should not be construed as research, trading tips or recommendations, or investment advice and is provided with no warrants as to its accuracy. Stock market data, including US and International equity symbols, stock quotes, share prices, earnings ratios, and other fundamental data is provided by data partners. Stock market quotes delayed at least 15 minutes for NASDAQ, 20 mins for NYSE and AMEX. Market data by Xignite. See data providers for more details. Company names, products, services and branding cited herein may be trademarks or registered trademarks of their respective owners. The use of trademarks or service marks of another is not a representation that the other is affiliated with, sponsors, is sponsored by, endorses, or is endorsed by Wikinvest.
Powered by MediaWiki