QUOTE AND NEWS
TheStreet.com  2 hrs ago  Comment 
NEW YORK (TheStreet) -- RATINGS CHANGES AIG was upgraded at Deutsche Bank to buy. Remains a story "in progress" as stock trades at 65% of book value, Deutsche Bank said. Valuation is attractive given recent pullback, Deutsche Bank also...
TheStreet.com  2 hrs ago  Comment 
NEW YORK (TheStreet) -- Micron Technology Inc.a was upgraded to "outperform" at Pacific Crestatoday with a price target of $37. The global manufacturer of semiconductors will benefit from balanced supply and demand, analysts said. "We are...
SeekingAlpha  Oct 15  Comment 
By Bret Jensen: There is no other way to say this - it is getting flat out ugly in the market right now. Ebola, plunging oil prices, Europe on the brink of another recession, big sell-offs in the energy sector, small caps, miners, etc…..take...
TheStreet.com  Oct 15  Comment 
NEW YORK (TheStreet) --Micron Technology Inc. was upgraded to "overweight" from "neutral" at JPMorgan on Wednesday. The firm said it raised its rating on the global manufacturer and marketer of semiconductor devices based on "strong demand...
Motley Fool  Oct 14  Comment 
Memory chip giant Micron Technology has been crushing the market since the game-changing Elpida acquisition in 2013. But why did the stock plunge 20% in two weeks?
Jutia Group  Oct 13  Comment 
[at Barrons.com] - As mentioned earlier, Micron Technology (MU), makers of DRAM chips, are among the few names bucking today’s continued sell-off in chip stocks, rising 29 cents, or 1%, to $28.08. Despite warnings of gloom from folks such as...
TheStreet.com  Oct 10  Comment 
NEW YORK (TheStreet) -- Shares ofaMicron Technologya fell 7.47% to $28.35 in morning trading Friday after weakness in chipmaker stocks dragged down the Nasdaq index and U.S. stock index futures. Microchip Technologya issued cautious sales...
TheStreet.com  Oct 9  Comment 
SAN FRANCISCO (TheStreet) -- Amid the broad market selloff Thursday, two semiconductor giants fell sharply on actions byatop executives.a In the case ofaAdvanced Micro Devices , the Sunnyvale, Calif.-chipmaker plummeted 10.1% to $2.95 afteraCEO...
SeekingAlpha  Oct 9  Comment 
By Shock Exchange: Dorothy from Wizard of Oz. Source: imdb.com. Over the weekend I was staring at my computer when a news flash came a across the screen. A Barron's article was claiming Micron Technology (NASDAQ:MU) had 50% upside due to...
Market Intelligence Center  Oct 8  Comment 
Micron Technology Inc. (MU) traded between $31.85 and $32.87 before closing at $31.86 Tuesday and presents some attractive trading opportunities today. MarketIntelligenceCenter.com’s algorithms have picked a Jan. '15 $31.00 covered call for a...




 

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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