) will be trimming its workforce to remain cost effective and
efficient. The company is expected to cut approximately 5% of its
30k strong workforce by fiscal 2014.
Moreover, the decision to lay off around 1500 employees
through attrition, voluntary buyouts and layoffs is expected to
bring down operating costs for the company in the long run.
However, in the near term the company may have to incur one-time
costs for the proposed reductions in the workforce.
The current spate of workforce reduction comes at the heels of
Micron's much-hyped and long-awaited acquisition of Elpida Memory
Inc. However, the employees of the acquired company will not be
affected by the current layoff strategy.
There is no doubt that the acquisition will help Micron to
expand its operation across the globe, especially Japan.
Moreover, the technical know-how that the company gains from
Elpida will be of much use and will also help it to understand
the Japanese market better.
Also, the fact that Elpida won a major DRAM (Dynamic Random
Access Memory) supplying agreement from
), will give Micron another reason to cheer. With this, Micron's
wafer manufacturing capacity will increase nearly 50%.
With the acquisition, the number of leading DRAM chip
manufacturers will drop to three, namely, Samsung (the market
leader), Micron and Hynix Semiconductor. Previously, Hynix was
ahead of Elpida while Micron had the lowest market share.
Micron had swung to profit in the last reported quarter (third
quarter of 2013) after reporting loss for the seven consecutive
quarters. The company reported solid operating performance on the
back of higher revenues and lower costs. We believe tight expense
control, manufacturing efficiency and secular shift toward mobile
DRAM will benefit Micron's fundamentals in the coming
Though Micron's prospects in the mobile DRAM market look
promising, it will not be easy to outpace Samsung. Samsung has
held the largest share of this market for years and there are
indications that it will sustain the same rank for the coming
years as well.
Stiff competition from
) are also concerns.
Currently, Micron Technology has a Zacks Rank #2 (Buy).
APPLE INC (AAPL): Free Stock Analysis Report
MICRON TECH (MU): Free Stock Analysis Report
SANDISK CORP (SNDK): Free Stock Analysis
STEC INC (STEC): Free Stock Analysis Report
To read this article on Zacks.com click here.