Micron Technology, Inc. (MU): Key Takeaways from JP Morgan Conference


One month ahead of the announcement of its quarterly results, Micron Technology, Inc. (NASDAQ:MU) has re-affirmed its mid-teens bit supply growth for the current fiscal year 2015. The company took the opportunity at JPMorgan conference on technology to project its views to clear any doubts in the minds of investors on DRAM market. According to the company, DRAM supply and demand to remain balanced in the current fiscal year.

Balanced

Micron Technology, Inc. (NASDAQ:MU) executives said during the conference that the PC market was the main driver for three decades. However, the PC market witnessed poor first quarter numbers and came in lower than predicted. One of the reasons could have been the strong Greenback.

Turning towards how the company was generating growth, its executives pointed out that 70% of its business is witnessing a growth of 25%. The remaining 30% of its business is also growing, but at a slender pace of 5%. However, the value of these businesses was not disclosed since analysts’ are estimating 3.7% revenue growth for the current fiscal year. For the May quarter, the Street is predicting 70 basis points YOY fall in revenue.

Mobile Handsets

Mobile has been witnessing a strong growth across different sectors. Therefore, Micron Technology, Inc. (NASDAQ:MU) too indicated that there was tremendous demand from mobile handsets. The company expects to face a very tight market as far as the mobile sector is concerned in the second half of the calendar year 2015.

The company’s executives have also talked about NAND memory card and the related gross margins. Its executive said that bits were not in the best markets. They have also pointed out that bits were underexposed as far as the enterprise business was concerned. However, Micron Technology, Inc. (NASDAQ:MU) indicated there was increased exposure rate to volatile client SSD business.

Analysts’ Opinion

Analysts have different opinions about DRAM market. Let’s look at the two divergent views expressed by Jefferies and Nomura and their opinion about the company’s shares. Their opinion comes on the heels depressed sentiments from the PC segment.

Jefferies analyst, Sundeep Bajikar, said that there was no price war between Micron Technology, Inc. (NASDAQ:MU) and Samsung to threaten either of the companies. He said that DRAM market is still healthy only. He pointed out that despite weak demand from PC, other end markets like mobile, as well as, server remained stable. The analyst expects under-supply, as well as, price stabilization for DRAM during the second half of the year 2015 as the brokerage increased success rate of Samsung’s new products. The analyst reiterated Buy rating on Micron shares.

On the other hand, Nomura has slashed its estimates for May and August quarters citing pricing softness on the back of weak PC demand. As far as long-term, the analyst finds Micron Technology, Inc. (NASDAQ:MU) lagging technology roadmap. Therefore, the brokerage reiterated Neutral rating.

Viraj Shah

Viraj Shah has completed M.Com (Finance) and is currently pursuing his CFP. He tracks US markets along with other global markets like India very closely. He is very passionate about stocks, real estate, and technology. He also believes that money can always be made in the market.

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