Micron Technology Inc.
) reached a 52-week high of $10.27 on Friday, Mar 22, 2013.
Micron shares gained momentum following solid guidance provided
in its second-quarter 2013 results announced the day before.
Expected synergies from the much-awaited Elpida buyout could be
another key driver. The closing price of the memory-chip maker on
Mar 22, 2013, was $10.04, representing a robust 1-year return of
about 21.7% and year-to-date return of about 51.4%. Average
volume of shares traded over the last three months stand at
approximately 29.1 million.
Moreover, this Zacks Rank #2 (Buy) company has a market cap of
$10.2 billion and a long-term expected earnings growth rate of
Mixed Bag Second Quarter Results, View Upbeat
Micron reported revenues of $2.08 billion, up 3.4% year over year
and 13.3% sequentially. The quarter's revenues came well above
the Zacks Consensus Estimate of $1.91 billion. The improvement
was mainly due to higher DRAM and NAND shipments as well as
favorable supply/demand scenario.
Gross margin expanded 710 basis points on higher volume sales of
NAND flash and DRAM chips as well as lower cost of production.
Operating margin was (1.1%) versus (10.2%).
Micron reported loss per share of 28 cents, which was better than
the year-ago quarter results but wider than the Zacks Consensus
Estimate of 20 cents loss per share. The loss was mostly due to
lower average selling price (ASP), lackluster PC demand and macro
uncertainty, slightly offset by higher sales volume.
Micron did not provide any specific guidance for revenues or
earnings. But it mentioned its optimism for the end markets such
as mobile, server, networking enterprise and embedded based on
strong demand for its memory chips. Micron is also confident of
witnessing supply/demand balance for DRAM and NAND memory chips
in 2013 and 2014. The chip maker expects industry-wide DRAM wafer
capacity to get reduced, which will bring down supply, ultimately
boosting ASP. For NAND, Micron is confident about growing demand
due to increasing use of solid state drives in smartphones.
Micron also stated that it is focusing more in the mobile DRAM
space and it has already designed low power DDR2 chips for two of
the top five smartphone makers.
Following the earnings release, the Zacks Consensus Estimates for
2013 and 2014 rose 2 cents each to 53 cents and 60 cents,
respectively, in the past 7 days. Two and three estimates moved
upward for 2013 and 2014, respectively.
However, only one estimate moved downward for 2013 in the past 7
Despite another quarter of loss due to PC market overhang, macro
backdrop, soft DRAM and NOR prices and flat NAND prices, we
remain encouraged by management's upbeat view on the DRAM and
NAND market fundamentals. We also believe that tight expense
control, manufacturing efficiency and secular shift toward mobile
DRAM will benefit Micron's fundamentals in the coming quarters.
Apart from this, the soon-to-be completed Elpida acquisition will
help Micron to gain memory market share, which is mostly
). Micron will also be able to save roughly $400.0 million on the
purchase price, given stronger dollar value against Yen.
Other Stocks to Consider
Other stocks in the technology industry that are currently
performing well and have a solid visibility include
Cabot Microelectronics Corp.
) both with a Zacks Rank #1 (Strong Buy).
CABOT MICROELEC (CCMP): Free Stock Analysis
MICRON TECH (MU): Free Stock Analysis Report
RAMBUS INC (RMBS): Free Stock Analysis Report
SANDISK CORP (SNDK): Free Stock Analysis
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