Micron Technology In Focus…

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Chip maker Micron Technology Inc. (MU) will trump out fourth-quarter numbers after market close on Thursday, October 1, amid battling economic conditions and negative macroeconomic forces. Wall Street analysts are expecting earnings of $0.33 per share and revenues of $3.56 billion for the fourth quarter.

In late June, Micron Technology reported a plunge in third-quarter profit, hurt largely by weak demand and pricing pressures due to softness in the personal computer sector as well as on one-time expenses. The company also provided weak revenue outlook for the fourth quarter, indicating the challenges it continues to face.

Micron Technology offers the industry’s broadest portfolio of silicon-to-semiconductor solutions—starting with foundational DRAM, NAND, and NOR Flash memory, and extending to SSDs, modules, MCPs, HMC, and other semiconductor solutions.

Looking Ahead…

For the fourth quarter, the company projects total revenue to be in the range of $3.45 billion – $3.7 billion. Thirty-One Wall Street analysts have a consensus revenue estimate of $3.56 billion for the fourth quarter.

Q3 Performance

Third-quarter net income was $491 million or $0.42 per share compared to $806 million or $0.68 per share last year.

Excluding items, adjusted earnings for the quarter were $620 million or $0.54 per share.

Revenues for the quarter were $3.85 billion, 3% lower than the previous year’s revenue of $3.98 billion.

Analysts polled by Thomson Reuters estimated earnings of $0.56 per share on revenues of $3.90 billion for the quarter. Analysts’ estimates typically exclude special items.

“In the fiscal third quarter, Micron experienced market headwinds driven primarily by weakness in the PC sector,” stated Mark Durcan, Chief Executive Officer. “We remain focused on the long term as we continue to deploy advanced process technology to enable leading-edge products and drive manufacturing efficiency.”

Takeover Interest…

In mid-July China’s largest state-owned chip maker Tsinghua Unigroup Ltd. has made a $23 billion bid to buy U.S. memory chip maker Micron Technology Inc. (MU), the Wall Street Journal reported Monday, citing people familiar with the matter.

According to the WSJ report, Tsinghua Unigroup has offered to acquire Micron Technology for $21 per share, representing a 19.3% premium to Micron’s closing stock price of $17.61 on July 13. Tsinghua Unigroup has reportedly presented a letter to Micron, outlining its bid.

If the deal materializes, it would be the largest takeover of a foreign company by a Chinese firm. It would also be the largest Chinese acquisition of a U.S. company. The previous record was Smithfield Foods Inc.’s$7.1 billion takeover by Chinese meat processor Shuanghui International Holdings Ltd. in 2013.

The semiconductor industry is seeing a wave of consolidation as chip makers grapple with rising costs and weak revenue growth. In June, Intel said it will buy programmable chip maker Altera Corp. ( ALTR) for about $16.7 billion in cash.

Mixed signal solutions provider NXP Semiconductors N.V. (NXPI) said in March that it has agreed to buy embedded processing solutions provider Freescale Semiconductor Ltd (FSL) for about $16.7 billion in cash and stock.

Avago Technologies Ltd. ( AVGO) said in May that it will acquire Broadcom Corp. (BRCM) for $37 billion in cash and stock.

Overall Market Conditions…

The company expects stabilizing DRAM ASPs across the broader market overtime, as it manages its product mix and distribute its capacity to a broad set of value added market segments. Consistent with prior expectations, Micron forecasts DRAM industry supply bit growth in the mid-20s in calendar 2015 and in the low to mid 20% in calendar 2016. The company currently believes that DRAM demand in calendar 2015 in aggregate will be at or exceed supply.

The company expects NAND industry supply bit growth in the high 30% range this year and in the mid 30% range next year. Micron is also making good progress with fab expansion in Singapore.

The company further continues to make capital investments to position itself for next generation production capabilities and for technology leadership.

Regardless of near-term market conditions, the company said it remains focused on the long-term, and continues to deploy advanced process technology to enable leading edge products for its customers as well as to drive ongoing manufacturing efficiency for Micron.

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